Annex B

Annex B: Guidance on the use of Blanket Authorities (Inserted February 2012)

1. Meeting cases

Where a meeting is to be held the provision in the blanket authority states the following:  

Pursuant to rule 8.2(3) of the Insolvency Rules 1986 to complete and authenticate forms of proxy on our behalf;

(a) by way of special proxy for the appointment of [name of IP*] as office holder under the provisions of the Insolvency Act 1986, or

(b) by way of special proxy for the appointment of any licensed insolvency practitioner as office holder under the provisions of the Insolvency Act 1986.

In the first instance the proxy holder must vote for the nominated insolvency practitioner as per the proxy, however Insolvency Rules 1986, Rule 8.3(6) allows the proxy holder to vote at his/her discretion if the nominated insolvency practitioner is knocked out.

 

2. Secretary of State appointments 

The following guidance only applies where the official receiver has decided a Secretary of State appointment is desirable.  

In applying this guidance it should be noted that the existence of a blanket authority does not mean that the insolvency practitioner will agree to act in a case – confirmation must first be sought (a telephone note is acceptable for a Secretary of State appointment).  In addition, the official receiver must ensure that the insolvency practitioner is qualified to act and holds an insolvency bond (see paragraph 17.55).

 

3. Cases with one majority creditor with a blanket authority 

In cases with one majority creditor who has authenticated a blanket authority, the insolvency practitioner holding the authority can be phoned directly to see if he or she wishes to accept the appointment.

If the insolvency practitioner is not willing to accept the appointment, then an appointment from the rota should be sought.

In cases where the petitioning creditor is HM Revenue and Customs and they are also the majority creditor the guidance in paragraph 17.67 should be followed.

 

4. Cases where two or more creditors, constituting a majority, have authenticated authorities for the same insolvency practitioner

As above, the insolvency practitioner can be phoned directly for his or her views.

 

5. Cases where a creditor without an authority has a majority, but a minority creditor has an authority

In such a case, the majority creditor should be consulted and asked if they wish to nominate a choice of their own or a rota appointment.

The blanket authority given by the minority creditor is not considered.

In cases where the petitioning creditor is HM Revenue and Customs, and HM Revenue and Customs has a majority, the usual procedure should be followed as per paragraph 17.67 (i.e. if there is no covering sheet from HM Revenue and Customs solicitors appoint from the rota, if there is a covering note consult with HM Revenue and Customs).

Where HM Revenue and Customs are the petitioning creditor but a minority creditor, they have indicated that they do not wish to be consulted on a Secretary of State appointment as a matter of course.  If HM Revenue and Customs has a specific interest in a case, they would like to be consulted prior to a Secretary of State appointment and in such cases they have stated that they will already be liaising with the official receiver.

 

6. Case with no overall majority, but with one or more minority creditor with a blanket authority 

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, see paragraph 17.51 (d).

The above guidance should apply in most cases.  If however, a Secretary of State appointment is appropriate, the official receiver should consult creditors in the usual manner, ensuring a majority of creditors by value approve the appointment of a particular insolvency practitioner or a rota appointment.

If a major creditor has given a blanket authority to an insolvency practitioner, then other creditors may be asked if they wish to approve the appointment of that insolvency practitioner.  It is possible that although the official receiver has deemed the assets in the case sufficient to warrant the appointment of an insolvency practitioner, the insolvency practitioner holding the authority may not wish to accept the case.  Therefore, when informing a creditor that an insolvency practitioner holds a blanket authority from another creditor, it may be prudent to establish the creditor’s intentions should that insolvency practitioner not wish to act – i.e. would they support a rota appointment.

The insolvency practitioner holding the authority should, if the correct clause is in place, be able to approve, on behalf of the creditor, a rota appointment or the appointment of an insolvency practitioner nominated by another creditor.