September 2006
PART 5
APPOINTMENT BY SECRETARY OF STATE
17.47 General considerations
In the majority of cases where an insolvency practitioner appointment is desirable, a meeting of creditors should be held to enable the creditors to make the appointment (see Part 3). The Secretary of State may appoint an insolvency practitioner as liquidator or trustee as an alternative to holding a meeting of creditors in certain circumstances [note 1].
Of paramount importance in any appointment by the Secretary of State, is that, unless this chapter indicates otherwise, the creditors’ views must have been sought and adhered to. (See paragraph 17.67 for the position of Crown creditors.) A file note should be retained on the case file detailing the creditors consulted, the amounts of their claims and their views.
The Secretary of State’s power to make an appointment must only be used in the circumstances set out in this chapter and should not be exercised simply for the convenience of the official receiver. If there is a possibility of contention, dispute or conflict, then there is a strong presumption that a meeting of creditors should be held.
In discussing a possible Secretary of State appointment with an insolvency practitioner, the official receiver should not suggest that the appointment is a foregone conclusion as the Secretary of State may decline to make the appointment [note 2].
17.48 Insolvent’s interests
In cases where the insolvent’s interests might be adversely affected by the early appointment of an insolvency practitioner (for example, in cases where there is a surplus) it is important that the insolvent is fully informed of the consequences of any appointment. The bankrupt’s attention should also be drawn to the possibility of a voluntary arrangement (see Chapter 57 - Alternative Individual Procedures, Part 1), a Fast Track Voluntary Arrangement (see Chapter 20 - Official Receiver's role in voluntary arrangements) or annulment application (see Chapter 6A - Annulments).
17.49 Role of Insolvency Practitioner Unit
The Insolvency Practitioner Unit (IPU) in Birmingham is part of IP Policy in London. IPU carries out a number of Secretary of State functions that include dealing with Secretary of State applications from Official Receivers, the registration of Individual Voluntary Arrangements and the licensing and regulation of Insolvency Practitioners (The Secretary of State currently licenses some 100 of the 1700 insolvency practitioners nationwide). IPU is also responsible for maintaining accurate details of all insolvency practitioners on Central Index and the Individual Insolvency Register (E.IIR) and deals with practitioners’ sanction applications in the absence of a creditors committees and objections to release. IP Policy deals with policy issues and all matters concerning the conduct of non Secretary of State licensed insolvency practitioners and the regulation of their recognised professional bodies.
IPU act on behalf of the Secretary of State in making insolvency practitioner appointments and in the consideration of those cases which require prior agreement before the appointment. Such an agreement is often referred to as an agreement in principle (see paragraph 17.53).
17.50 Timing of application
The official receiver when acting as liquidator or trustee can normally apply at any time to the Secretary of State for the appointment of a practitioner in his/her place [note 1]. A Secretary of State appointment cannot be made where the official receiver is receiver and manager of a bankrupt’s estate, as opposed to trustee.
An application should not be made where steps have been taken to call meetings. If no resolution is passed at those meetings for the appointment of an insolvency practitioner, then the official receiver remains liquidator or becomes trustee and may make an application to the Secretary of State.
17.51 Routine (non urgent) applications
Where a Secretary of State application is not urgent and relates to a case within the criteria outlined below, the official receiver can make his/her application [note 3] simply by posting it to IPU. This applies to cases where:
a) a notice of no meeting and the official receiver’s report to creditors has already been issued and sent to creditors, there is good reason for the assets not having been dealt with earlier and the majority of creditors have indicated in contact/ correspondence with the official receiver that they approve of the appointment.
The reasons for the assets not having been dealt with and for not calling a first meeting should be stated in the "General Remarks" section of the application;
b) there is no known creditor or public interest, a notice of no meeting has already been issued and sent to creditors and a creditor has requested the appointment of a particular insolvency practitioner, who has agreed to take the case (see paragraph 17.66);
c) a meeting of creditors has been held but no appointment was made;
d) a meeting would be an unnecessary formality and cost to the estate because a majority of known creditors by value, with undisputed claims, who would be entitled to vote at a meeting (or one creditor, if it has a clear undisputed majority in value) have indicated that they would appoint a particular insolvency practitioner or have otherwise agreed to the appointment of the next insolvency practitioner on the official receiver’s rota. The official receiver must retain a file note of the creditors consulted and their views.
Official receivers should avoid putting themselves in the position of having to arbitrate between competing nominations from different creditors, or effectively holding "telephone" meetings in order to effect an appointment. In these cases, unless there is serious risk of loss to the estate without an early appointment, a meeting should be called;
e) there is a charge, no surplus is expected for unsecured creditors, and the charge holder is unwilling to appoint a receiver or take action itself;
f) the available assets of whatever description are, in the opinion of the official receiver, unlikely to attract a nomination at a meeting.
The official receiver’s opinion will be based upon his/her knowledge of the ‘local market’. Assets in such cases might consist of antecedent recoveries or equity in the matrimonial home. However, it will not automatically be the case that these types of asset cases are appropriate for a Secretary of State appointment and the official receiver must be able to justify the decision not to call a meeting and to seek a Secretary of State appointment on a case-by-case basis;
g) the case is a bankruptcy, the spouse or former business partner of the debtor has previously been adjudged bankrupt, both debtors have similar creditors and the official receiver is of the view that it would be beneficial to the estate for the same trustee to act in both cases;
h) an insolvency practitioner has previously acted as compulsory liquidator or trustee in bankruptcy for the case in question and obtained his/her release; new assets have come to light or existing assets have increased in value and it would be beneficial to the estate to re-appoint the same insolvency practitioner. The official receiver must be satisfied that he/she knows of no reason why creditors might object to the re-appointment of the same insolvency practitioner. In this regard, the insolvency practitioner must be asked to confirm whether any complaints were made against his/her conduct in relation to his/her previous administration of the case. If complaints were made then agreement in principle must be sought (see paragraph 17.53). In liquidation cases, a check must also be made to ensure that the company has not been dissolved. Appointments of liquidators to dissolved companies should not be sought.
i) the case is two or more years old and the principle asset to be realised is the interest in a dwelling house which at the date of the bankruptcy order was the sole or principal residence of the bankrupt, their spouse/civil partner or former spouse/civil partner and provided the appropriate paragraph in the CAR A form has appeared in the report to creditors:
'The principal asset in this case is the dwelling house referred to above. At this stage it is envisaged that the bankrupt's interest may be realised without the need for possession proceedings, however if this is not possible action will be taken that may include the official receiver seeking the appointment as trustee of the next insolvency practitioner from his/her rota without further reference to creditors.'
The reason this text is required is that it is not consistent with The Service's general policy that creditors should be consulted before the appointment of a trustee is made. Property interest cases have a special nature in that there is a limited time available to realise the asset before it re-vests in the bankrupt and there is difficulty in consulting creditors given the passage of time since the bankruptcy order. The inclusion of the text puts the creditors on notice that the official receiver may not consult them on a rota appointment in the future and it gives them the opportunity to make their wishes known to the official receiver.
There are likely is to be two situations in which this will be necessary. The first is where the official receiver had intended to keep the case as a straightforward realisation (e.g.. the co-owner buying out the bankrupt's interest), but this changes. The second is where no action with regard to the property is being taken at the time the report to creditors is issued and the case is passed to the RTLU for review at the two year point.
17.52 Urgent applications
If an urgent appointment is required in a case as described in paragraph 17.53, then the effective date of appointment can be agreed by telephone with a member of the technical staff of IPU (0121 698 4441). Callers should state that they require agreement in principle for a Secretary of State appointment and will be put through to an appropriate person. Calls should not be directed to individual members of staff. The date of the telephone conversation, the agreed effective date of appointment and the name of the officer who agreed the appointment must be included in the general remarks section of the application form [note 3] (see paragraph 17.59).
17.53 Cases requiring prior agreement ("agreement in principle")
The official receiver must obtain agreement in principle of a proposed Secretary of State appointment from IPU, before he/she submits an application form, in the following circumstances:
a) where there is actual or potential public interest, regardless of the age of the case;
b) where there is, or could be perceived by any parties involved in the insolvency to be, a potential conflict of interest between the insolvency practitioner’s duties to the insolvent estate and other matters;
c) where there is contention or dispute, either relating directly to the appointment of an insolvency practitioner or to the case generally;
d) where the proposed insolvency practitioner is not the next insolvency practitioner on the official receiver’s rota, except in situations where the appointment of the insolvency practitioner has been agreed by the majority in value of creditors;
e) in all cases which do not fall into any of the categories in paragraph 17.51.
Examples of circumstances which may justify a Secretary of State appointment under this paragraph are where:
The official receiver will be expected to provide particular justification for appointment by the Secretary of State rather than by summoning meetings. He/she will need to confirm that the major creditors have been consulted. Exceptionally, if an urgent appointment is required and creditors are unavailable or cannot immediately deal with the query, an appointment may be made at the discretion of IPU. Full notes of any contact and attempted contact with creditors must be retained on the official receiver’s file.
17.53a Delivery of certificate of appointment in urgent cases
(December 2008)
Where an urgent appointment has been sought and agreed between the official receiver and the Secretary of State, IPU will despatch a signed copy of the certificate of appointment direct to the insolvency practitioner; the other copy will be sent to the official receiver as normal. This is to ensure that the insolvency practitioner can act without delay.
In order to facilitate despatch of the appointment certificate on the date of the agreement the official receiver is required to fax a draft certificate of appointment together with a fully completed IPASSA form immediately after agreement has been reached by telephone, quoting the name of their contact at IPU and stating clearly the matter is an urgent agreement in principle appointment. The official receiver should also confirm the date that the notice of no first meeting (NNM) has been lodged with the court in respect of bankruptcy cases.
The new process applies only to urgent agreements in principle. In routine Secretary of State appointments the certificate of appointment will be sent to the official receiver for handing over to the IP together with the case records.
17.54 Application to be agreed by OR/AOR
An examiner must agree the need for the application with the official receiver or assistant official receiver before contacting IPU. It is important that he/she is familiar with the facts of the case and has the necessary details available when telephoning. If an appointment is required urgently, this must be agreed at the same time as approval in principle is obtained. The relevant details of the application should be included in the ‘General Remarks’ section of the application form [note 3].
17.55 Appointment of an insolvency practitioner
Before an application is made, the official receiver must ensure that the proposed office holder is not only prepared to act but is qualified (i.e. is authorised to act as an insolvency practitioner and holds an insolvency bond). This is particularly important if the proposed office holder is not taken from the official receiver’s rota or is not known to the official receiver. (For further information concerning insolvency practitioners, including their qualifications and authorisation, refer to Chapter 55 - Insolvency Practitioners paragraphs 55.1 to 55.8 and 17.6 to 17.9)
An insolvency practitioner is not required to provide a written consent in connection with the Secretary of State appointment. The proposed office holder should normally be the next person on the official receiver’s rota who is prepared to act, unless the majority of the creditors have indicated a preference. The official receiver should not lead the insolvency practitioner to believe he/she will be appointed until his/her appointment has been agreed by the Secretary of State. Following the agreement of IPU, the official receiver must promptly inform the insolvency practitioner of the date of his/her appointment so that appropriate action may be taken as regards assets for which he/she has responsibility. The official receiver has a duty to provide the proposed office holder with complete and accurate information about the insolvent’s estate and any other matters relevant to a liquidator’s/trustee’s administration of the case. (See paragraph 17.76 on the official receiver’s duty of care when providing information to insolvency practitioners).
17.55A Form to be used when ascertaining if an insolvency practitioner is prepared to act (inserted March 2012)
To enable insolvency practitioner’s to make informed decisions, about whether to take a case or not, it is important that all the relevant information is provided. To assist official receivers in the provision of information to insolvency practitioners, the Insolvency Practitioner Handover form has been created and should be used in all cases when offering and handing over a case to an insolvency practitioner.
There is a separate form for company cases Annex C and for bankruptcy cases Annex D. The relevant document should be emailed or faxed to the insolvency practitioner during or after the initial phone call offering them the case. If the insolvency practitioner is sent the document after he/she verbally accepts the case the official receiver should be satisfied that the insolvency practitioner is still willing to accept the case. A copy should be saved electronically to the electronic case file.
17.55B The Insolvency Practitioner handover form to be updated before handover (inserted March 2012)
The Insolvency Practitioner Handover form (see paragraph 17.55A) should be updated if there are any changes between the case being offered to the insolvency practitioner and the handover occurring.
When the case is handed over to an insolvency practitioner a final version of the document should be included in the handover. A copy of the final version should be saved electronically to the electronic case file .
17.56 Use of insolvency practitioner rotas for Secretary of State appointments (updated September 2012)
Each official receiver should maintain a list of local insolvency practitioners in the form of a single rota to be used when a case is deemed suitable for a Secretary of State appointment. Official Receiver’s Business Support (ORBS) is the first point of contact for official receivers on insolvency practitioner rota issues and will work in partnership with Insolvency Practitioner Unit (IPU) to resolve any problems. Guidelines for official receivers on rotas can be found at Annex E.
The use of a rota ensures that a fair distribution of cases in which the official receiver decides there is a need for a Secretary of State appointment. Additionally the use of a rota ensures that in making those appointments the director(s)/bankrupt/creditors are not inconvenienced by the location of the insolvency practitioner.
17.56A Inclusion of insolvency practitioner on rotas (inserted September 2012)
Inclusion on the rota will be by insolvency practitioner firm with the appointee(s) being named individually. These firms must operate within the area covered by the official receiver’s office and have a genuine local presence. The criteria that must be met by a firm of insolvency practitioners to be included on the official receiver’s rota is highlighted in the guidelines at Annex E.
The criteria provide that a PO Box address will not merit inclusion on the rota, and that the insolvency practitioners office must occupy and operate from an office within the boundaries of the court attached to the official receiver. The office must also be permanently staffed by people with sufficient knowledge to be able to deal with directors, bankrupts, creditors and debtors at any time within normal business hours. The insolvency practitioner need not be based in the office but must exercise appropriate supervision of, and give direction to, the day to day casework, and be available for meetings at that office during normal hours.
A named insolvency practitioner in each firm on the rota will have responsibility for the certification that each insolvency practitioner in the firm is duly authorised and qualified to act, and that the firm meets the criteria for membership. Te certificate will take effect on 1 October 2012 and will last for 2 years. Insolvency practitioners then wishing to remain on the rotas will be required to re-certify.
Where the official receiver becomes aware that an insolvency practitioner firm on the rota fails to meet the criteria, that firm will be removed from it and, if appropriate and subject to any representations from the firm, will consider reporting the insolvency practitioner to their recognised professional body.
The Central Index is regularly updated by IPU to show changes made to the insolvency practitioner database, such as retirements, deaths, change of main address, change of firm, newly appointed insolvency practitioners etc.
17.56B Restriction or removal from rota (inserted September 2012)
From time to time a Recognised Professional Body may issue a restriction order against an insolvency practitioner which will restrict the insolvency practitioner from taking new appointments for a given period of time. Any restrictions will be included in the insolvency practitioners' details on ISCIS. Details of current restrictions are also available on the IP restrictions list on the IPU pages of the intranet and new restrictions are included in the ORS Bulletins. The official receiver should ensure that any insolvency practitioners on his/her rota are not offered new appointments during the period of their restriction. Should an appointment be inadvertently made and accepted the official receiver should inform IPU.
If the official receiver becomes aware that any firm on the rota fails to meet the criteria and fails to remedy any defect within a reasonable time (e.g. one month), they should be removed from the rota and the official receiver should notify the firm in writing of the decision and the reasons for it. If the official receiver is of the opinion that any insolvency practitioner has provided deliberately misleading information in an attempt to be placed on the rota, the matter should be referred to IPU. A firm that has been removed from the rota for failing to meet the criteria can reapply for inclusion if they can subsequently meet the criteria.
If ORBS become aware that an insolvency practitioner has been inappropriately included on the official receiver’s rota, as a result of an IPU monitoring visit, for example, the official receiver will be alerted to enable further enquiries to be made.
17.56C Operation of and recording on rotas (inserted September 2012)
Official receivers should only operate one local insolvency practitioner rota (see Annex E). The rota should be used where the value of the realisable assets is likely to attract an insolvency practitioner appointment.
The official receiver should ensure that both staff and insolvency practitioners know the basis for offering cases from the rota. The rota should record the details of the cases offered to the insolvency practitioner and whether the case was accepted or rejected. The general principle is that if it is a rota appointment the insolvency practitioner firm next on the rota should be offered the case(s). Repeatedly declining to accept cases can be considered a ground for the official receiver to exclude an insolvency practitioner from the rota. If the official receiver is of the opinion that it would not be appropriate for the Secretary of State to appoint the insolvency practitioner firm next on the rota, because it does not have the resources to deal with a complex case, for example, he/she should seek the appointment of the next suitable firm.
17.57 The national civil recovery rota (amended September 2012)
The national civil recovery rota is no longer available. For guidance on the use of rotas for the appointment by the Secretary of State of insolvency practitioners see Annex E.
17.58 Use of rotas by Regional Trustee Liquidator Units
RTLUs will seek the appointment of an insolvency practitioner to a case where the credit balance on a case warrants an appointment. They will use the local office rota and should be informed of any changes to the rota.
17.59 Joint appointments
In a few cases it may be desirable to appoint joint office holders (see also paragraph 17.18). For example, a joint application might be necessary because of the size, complexity or geographical locations of the insolvent business. Additionally, some firms favour the appointment of joint liquidators/trustees for practical purposes. Consequently, joint appointments may be made when requested by the creditors or where the circumstances of the case warrant it and where there is unlikely to be a negative effect in terms of costs.
The appointment must include a declaration as to whether the joint office holders must act together or may act separately [note 7]. The insolvency practitioners concerned should be consulted on this point (in the case of regular appointees this should be noted on the rota) and an appropriate paragraph should be added to the certificate of appointment as follows:
17.60 Formalities of appointment
Once the official receiver is in a position to apply for a Secretary of State appointment (i.e. either he/she has obtained an agreement in principle to the appointment (paragraph 17.53) or prior agreement is unnecessary (paragraph 17.51) he/she should submit a completed application form which must be signed by the official receiver or assistant official receiver. IPU will only accept applications submitted on form IPASSA.
All relevant parts of the form must be completed. Specifically:
The ‘General Remarks’ section must contain the total value of known creditors entitled to vote at a meeting and a brief description, including the value, of the assets in all cases; together with any additional information required in support of the application.
If a member of IPU has given agreement in principle (see paragraph 17.53), the name of the person who has agreed the appointment must be stated in the application.
The official receiver must also prepare three copies of the certificate of appointment to accompany the application (see paragraph 17.62).
The official receiver must select the correct address for the insolvency practitioner from LOIS. If either the insolvency practitioner or his/her address does not appear the official receiver should contact IPU.
IPU will not create a new address unless documentation is provided from the insolvency practitioner to show that they occupy the address in question, e.g. a letterhead, and will not create a new insolvency practitioner entry on LOIS without first checking with the insolvency practitioner’s authorising body. If it is not possible to select an insolvency practitioner as LOIS does not record a previously appointed practitioner’s release, the official receiver should seek confirmation that the release has been obtained then contact Estate Accounts Directorate to effect the recording of the release on LOIS;
If the appointment of two or more insolvency practitioners is sought, a joint appointment clause must be included in the certificate (see paragraph 17.59);
The official receiver should not insert the date of the insolvency practitioner’s appointment on the certificate. This will be done by IPU (but see paragraph 17.62 if a specific date is required).
The application and the three draft certificates of appointment should then be sent to IPU or via DX post to: Insolvency Practitioner Unit, DX 713897, Birmingham 37. It should not be addressed to a specific officer unless so requested. In urgent cases the application can be faxed to IPU (fax number 0121 335 4522).
Applications based on agreements in principle should be sent to IPU by no later than the working day following the day the agreement in principle was given.
The appointment of an insolvency practitioner as liquidator or trustee within twelve weeks of the date of the insolvency order does not relieve the official receiver from a duty to report to creditors (and contributories) with respect to the winding up or bankruptcy proceedings and the state of the company’s or bankrupt’s affairs. (For further information on reports by the official receiver see Chapter 18 - Reports to Creditors and Contributories).
17.61 Additional information or clarification
If any additional information, or clarification is required, IPU will first contact the person named as the official receiver’s reference on the application. If the information/clarification sought is not provided to IPU by the end of the day following receipt of the application, IPU will consider returning the application to the official receiver unprocessed.
17.62 Effective date of appointment
(Amended July 2010)
If the official receiver does not seek an urgent appointment, the effective date of appointment will be three working days after the day that IPU process the application. This date will be stated on the certificate when it is returned to the official receiver. If a specific date is required it should be agreed with IPU (see paragraph 17.53) and included on the draft certificate sent to IPU.
Two signed copies of the certificate will be returned to the official receiver, who must file one copy in court (but only for pre 6 April 2010 cases) and, after taking a copy for his/her file, give the other copy to the appointed insolvency practitioner.
For post 6 April 2010 petition cases, a copy of the certificate of appointment is no longer required to be filed at court. The official receiver should continue to take a copy of the certificate for his/her file and give the other copy to the appointed insolvency practitioner [Note 8] [Note 9].
IPU aim to process all of Secretary of State applications within 24 hours of receipt. If the certificates are not received within one week of sending them, and there has been no contact from IPU, the official receiver should contact the Secretary of State administrator whose details can be found on IPU’s Intranet site.
17.63 Refusal to appoint
The Secretary of State can refuse to appoint a liquidator or trustee [note 2]. The official receiver will be notified of any refusal by the Secretary of State to make an appointment. If a practitioner is expecting to be appointed because he/she has been approached on the matter, the official receiver should let him/her know as soon as possible that an appointment will not be made. If the official receiver believes that a case will involve him/her and his/her staff in considerable work in protecting and dealing with assets, he/she should consider the possibility of appointing a special manager (see Chapter 32.4).
17.64 Creditors power to requisition meetings
The official receiver is required to explain in a notice of intention not to summon a creditors’ meeting, that creditors have the power to requisition a meeting. This applies irrespective of whether an application for a Secretary of State appointment has been or will be made. If a meeting is requisitioned and a Secretary of State appointment has been made in the interim, the official receiver should suggest to creditors that the requisition upon him/her is withdrawn and that a requisition is made instead upon the liquidator or trustee. If the creditors refuse to withdraw their requisition, the official receiver should consult Technical Section. Further details on requisitioned meeting are provided in Chapter 16 - Meetings, Part 2.
17.65 Requests for the appointment of an insolvency practitioner as trustee where the bankrupt is not cooperating
There are a growing number of bankruptcy orders made on the petition of a local authority for non-payment of council tax. Generally speaking, before presenting the petition, the local authority will have run a Land Registry search to check whether or not the bankrupt has an interest in a property, which will form part of the bankruptcy estate. Once the bankruptcy order is made it seems that most local authorities will seek to appoint a nominated insolvency practitioner as trustee. It is unlikely that that the local authority will be a majority creditor in most of these cases; consequently, the official receiver will need to decide whether it is more appropriate to call a first meeting of creditors or to contact the major creditors in the case and seek their views with a view to seeking a Secretary of State appointment.
There will be some cases in which the bankrupt fails to co-operate at first and the official receiver is generally left knowing only the petitioning creditor. The official receiver may want to wait until he/she has had a chance to establish whether there are any other creditors (for example, through 3rd parties) but, the official receiver is entitled to rely on the information available to him/her at the time and could seek a Secretary of State appointment for the insolvency practitioner nominated by the local authority.
17.66 Requests for the appointment of an insolvency practitioner by creditors after a notice of no meeting has been issued
(August 2008)
A number of insolvency practitioners have been making requests to official receivers for appointment on cases in which they are speculating that there may be additional recoveries based on the information provided in the report to creditors. To ensure that all requests are dealt with consistently the following policy should be applied when such a request is received.
It should be noted that a general meeting for the purpose of appointing a trustee/liquidator other than the official receiver may only be requisitioned by creditors where at least 25% of creditors by value support the request. See Chapter 16, paragraph 16.21 for further information.
If the OR is of the view that there is a reasonable prospect of the creditors benefiting from the appointment then he/she should seek the appointment of the nominated insolvency practitioner without delay using the procedure outlined in paragraph 17.51.
If the OR is of the view that there is a reasonable prospect of the creditors benefiting from the appointment then he/she should seek the appointment of the nominated insolvency practitioner without delay using the procedure outlined in paragraph 17.51.
17.67 Crown debts (amended April 2013)
HMRC have advised that there are some cases where they are the petitioning creditor where they are pursuing recoveries more actively than usual and some other cases that they have a special involvement with. In these instances their interest as a creditor may be frustrated by a rota appointment. Where this is the case this will be flagged up in the petition information provided.
Unless specific instruction is given in the petition information, when HMRC are the petitioning creditor, HMRC preference is for a Secretary of State appointment to be made from the official receiver’s rota. If, in exceptional circumstances, HMRC’s consent is to be sought for an appointment when they are not the majority creditor, contact should be made via the General Insolvency Help Line 01903 701037. See also paragraph 10.8 of the Partnership Agreement between HMRC and The Insolvency Service by clicking here
The Insolvent Partnerships Order 1994 requires the official receiver to consider whether or not to hold a meeting of creditors in partnership cases, bringing partnership proceedings into line with compulsory liquidations and bankruptcies. In Article 8 and 10 cases, a responsible insolvency practitioner may be appointed by the Secretary of State. The insolvency practitioner appointed automatically becomes the responsible insolvency practitioner in relation to any other member of the partnership where a subsequent order is made under the same article.
The official receiver should be aware that in some Article 8 partnership cases, bankruptcy orders may be made against partners before the winding-up order is made against the partnership. There is no power for the Secretary of State to appoint an insolvency practitioner in any of the estates until the winding-up order has been made. This is because the official receiver must be liquidator of the partnership before he/she can apply to the Secretary of State and he does not become so until the winding-up order is made.
The official receiver is also unable to seek an appointment in article 8 cases where only a winding-up order is made against the partnership and the petitions against the members remain to be determined as he/she must not only be liquidator of the partnership but liquidator/trustee of at least one member before he/she can seek an appointment. If the members’ petitions are not determined within 28 days of the winding-up order against the partnership, the proceedings are treated as if a winding-up order had been made under article 7 and an appointment may be sought. The petitions against the members proceed as "ordinary" petitions without the modifications made by the IPO. Consequently, where the members’ petitions subsequently result in insolvency orders, the insolvency practitioner acting as liquidator of the partnership will not automatically become liquidator/trustee of the member unless the court directs at the hearing that the provisions of article 8 apply or subsequent directions are sought to apply the provisions of article 8 to the proceedings.
In Article 11 cases, any Secretary of State appointment is made under section 296 and, as above, where subsequent orders are made under Article 11 against insolvent members, the practitioner originally appointed automatically becomes trustee.
For further information on the Insolvent Partnerships Order 1994 and on partnerships generally, see Chapter 53 - Partnerships
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