Where there is a prospect of an appointment of an insolvency practitioner as liquidator or trustee, the official receiver should be reluctant to take steps to realise assets, other than perishable items, unless those assets are viewed as being in jeopardy in any way. The official receiver is still responsible for the insurance and protection of any assets and will have to realise those assets if he/she believes them to be at risk or the cost of securing the assets will significantly outweigh the realisable value.
As the chance of collecting book debts reduces considerably over time, the Insolvency Service’s book debt collection agent should be instructed as soon as details of book debts become available See Chapter 31.1 Book debts, Part 2 for further details of the book debt contract.
When a liquidator/trustee is appointed he/she must be notified of the book debt collection agent’s involvement as soon as possible and the book debt collection agent must be informed of the appointment of an insolvency practitioner (see paragraph 31.1.21).
The official receiver will be invoiced for any recoveries up to the date of the insolvency practitioner’s appointment. The book debt collection agent will then seek to renegotiate their employment with the insolvency practitioner.
Where the official receiver realises assets, the proceeds of sale should be paid into the estate account and any relevant fees charged [note 1]. Monies should not be held in a suspense account pending the appointment of an insolvency practitioner.
(Amended February 2014)
The administration fee is charged on the making of the winding up or bankruptcy order [note 2]. In all cases where the insolvency order is made after 1 April 2004 the administration fee covers the costs of all actions/duties carried out by the official receiver in his/her role as official receiver (e.g. recovering books and records, calling meetings and public examinations) and all these costs will be paid out of Vote. Only costs and disbursements relating to the official receivers' duties as liquidator or trustee and in respect of the protection and realisation of assets should be charged to the individual estate account, including insurance premiums. Further details of payments out of the estate are provided in Part 1 of Chapter 36.
The insolvency practitioner should be notified of any known or probable expenses which are to be incurred (e.g. in connection with a public examination or accruing agents’ charges) for which the official receiver will be liable up to the date of handover . The accruing expenses must relate solely to the instruction of agents - public examination expenses must stay with the official receiver and the insolvent’s estate.
Any invoices received after handover, e.g. relating to the payment of insurance premiums due, will be charged to the estate with the resultant debit balance being transferred to the insolvency practitioner.
17.76 Handover of books and records (amended April 2012)
The insolvency practitioner is entitled to receive from the official receiver all the insolvent’s (as distinct from any other party’s) books, papers and other records, and only in exceptional cases should the official receiver consider retaining any of these, e.g. because of a pending prosecution or disqualification [note 3]. For guidance on ensuring all books and records are handed over in a timely and cost efficient manner, see Chapter 10, paragraph 10.37 and 10.37A.
The insolvency practitioner has a duty to assist the official receiver [note 4], who will be able to recover records and documents from the insolvency practitioner if they are required at a later date (see paragraph 47.42 in Chapter 47 - Disclosure). Insolvency practitioners have been requested to keep the insolvent’s records in the same boxes they were handed over in (see paragraph 10.37 in Chapter 10 - Custody, Preservation and Destruction of Records). When a case is handed over, ISCIS should be updated to show that the records are held by the liquidator/trustee.
Where prosecution/disqualification/bankruptcy restriction proceedings are pending, the official receiver should have regard to Part 4 of Chapter 10 on the preservation and destruction of records. If books, records and papers are handed over in such cases, it is essential that the insolvency practitioner is made aware of the requirement to preserve the documents (see particularly paragraph 10.40). Where the books, records and papers are retained, the practitioner should be invited to attend at the official receiver’s office to inspect the records as required. Any relevant documentation may be copied on request.
If the official receiver comes across an instance of an Insolvency Practitioner losing an insolvent’s accounting records the matter should be reported to the insolvency practitioner's licensing body.
17.77 Official receiver’s duty of care
The official receiver owes the liquidator or trustee a common law duty of care when providing information and the official receiver should take care to supply proper, complete and accurate information about the insolvent’s estate and, in particular, should ensure that information which is not readily apparent from the documents being supplied - for example, details of telephone conversations or meetings the subject of which affects the estate - is conveyed. This advice should be applied from the first time any approach to an insolvency practitioner to take a case is made. If this is not done, and the office holder can show that he/she has suffered loss as a consequence of that failure and that the official receiver has been negligent, an action may lie against the official receiver (or one of his/her officers) for damages for breach of that common law duty of care. It is also important that the information provided assists the insolvency practitioner in obtaining his/her specific penalty sum for the correct amount (see paragraph 17.7).
Any claims against the official receiver for damages for breach of common law duty of care should be referred to Technical Section.
To assist the official receiver in the provision of information to the insolvency practitioner the Insolvency Practitioner Handover form should be completed in all cases - Annex C (company) and Annex D (bankruptcy) (see paragraph 17.55A-17.55B).
The form 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 should be saved electronically to the electronic case file.
(Amended April 2014)
The official receiver is required, on handing over the estate to an insolvency practitioner appointed as liquidator or trustee, to supply to that person such information as is reasonably required by the liquidator/trustee for the effective discharge of his/her duties in that capacity [note 5]. The following items should be included in the hand-over of the estate to the liquidator or trustee:
The following types of information documents should not be handed over to the insolvency practitioner:
As outlined at paragraph 47.40, the official receiver is under a duty to supply the liquidator/trustee with such information as he/she will require to discharge his duty as such.
In short, this will primarily be documents relating to the assets and liabilities of the insolvent and not, for example, information relating to the official receiver’s investigations; or complaints received (see paragraph 17.78a).
Where the document (for example, a narrative statement or a letter from the insolvent) contains information that should be disclosed and also information that should not be disclosed to the insolvency practitioner , the official receiver should extract the ‘disclosable’ information into a separate document or letter and disclose that instead. If that is impracticable (where, for example, the ‘un-disclosable part makes up a minor part of the document), the official receiver may disclose the document with the ‘un-disclosable’ element redacted.
If asset related information comes to light after handover, the official receiver must immediately inform the liquidator or trustee and then confirm, in writing (which can include in electronic form), any discussion with him/her.
See also paragraph 47.46a.
The handover record book [note 7] is the official receiver’s report to the liquidator or trustee on the handover of the estate.
The record book (see paragraph 17.78d) must include details of the assets (including potential antecedent recoveries) comprised in the estate and their expected realisable values.
It should also include notes drawing the insolvency practitioner’s attention to important matters relating to the case, including urgent disclaimers required, ongoing asset investigations, uncorroborated information, insurance obtained or the employment of agents.
In addition, the record book should include the Department’s reference number for the case, i.e. the case number as shown on ISCIS; the insolvency practitioner will need to quote this number in his/her transactions relating to the Insolvency Services Account (see paragraph 17.78i).
The official receiver’s report on handover of the estate must also contain an entry to the effect that the liquidator or trustee should, as soon as possible, verify or expand on the information given by the official receiver.
The official receiver should inform by letter all agents previously instructed, that an insolvency practitioner has been appointed as liquidator/trustee and that the official receiver will be responsible for pre-appointment charges if the insolvency practitioner has insufficient funds to pay these costs. A copy of this correspondence should be given to the insolvency practitioner.
Immediately after handing over the estate any insurance effected by the official receiver should be cancelled (subject to any instructions the practitioner may have given the insurer). Guidance on the payment of premiums for insurance taken out by the official receiver is given in Chapter 49 Insurance.
It is no longer necessary to handover the estate cash book (estate ledger) to the appointed insolvency practitioner. Since the advent of ISCIS the estate ledger has been kept electronically in a format that insolvency practitioners can access and continue to use.
In addition to any specific receipts obtained for any item, a general receipt for all the documents etc handed over should be prepared by the official receiver, signed by the insolvency practitioner or his/her representative and retained on the official receiver’s file.
The liquidator or trustee should, on the handover, sign the appropriate form of undertaking to the official receiver to pay his/her debit balance (if any) [note 8]. This undertaking should be signed even if the official receiver is transferring a credit balance to the liquidator or trustee.
The chairman of the meeting of creditors certifies the appointment of a liquidator or trustee when he/she is provided with a written statement to the effect that the person nominated is an insolvency practitioner, is duly qualified and consents to act .
The liquidator or trustee’s appointment is effective from the date on which the appointment is certified by the chairman of the meeting [note 9].
In cases where the appointment of the liquidator/trustee is made by the Secretary of State, the insolvency practitioner does not need to provide a written consent to act. The certificate of appointment (signed by IPU on behalf of the Secretary of State) specifies the effective date of appointment [note 10].
In cases where the appointment of a liquidator/trustee is made by the court, the appointment is not effective until the appointed person has filed in court a statement to the effect that he/she is an insolvency practitioner, duly qualified to act and consents to act [note 11].
17.82 Immediate handover
It is important to hand over the case on or shortly after the formal date of appointment and, in any event, the case must be offered for handover within eight working days following the date of nomination, appointment or subsequent agreement to act.
From the date of appointment, not handover, the insolvency practitioner has a personal responsibility for the assets and under the bonding arrangements must notify his/her insurers of the appointment, assets and other details within 15 days of the end of the month in which the appointment took place. Retrospective bonding is prohibited and the insolvency practitioner can face financial and other penalties as a result of delayed handovers.
If it appears likely in advance of a meeting that an insolvency practitioner will be appointed, which should be in the majority of cases, there is no reason why all the papers cannot be prepared for handing over to the insolvency practitioner or his/her representative immediately after the conclusion of the meeting. Even if all the papers cannot be assembled before the meeting, the important papers can be handed over and the handover effected, with the remaining papers following at a later date. However, if the official receiver has to await confirmation that the insolvency practitioner is authorised to act, no documents should be handed over until that confirmation has been received.
The estate cash book should be sent to the insolvency practitioner as soon as it is available if it cannot be handed over with the other documents. The handover should not be delayed on account of the estate record book not being available.
17.83 Handover by post
Handovers may be effected by post. The insolvency practitioner must acknowledge receipt of articles handed over by returning the handover list, liquidator/trustee’s undertaking and any other specific receipt duly signed [note 12].
17.84 Handover after the official receiver has been released as liquidator
If a case is being handed over to a liquidator after the official receiver has made application for his/her release, the record book should contain a note of the date on which the application for release was made and whether the release has been granted. The notes in the record book must confirm whether the official receiver has made any application to defer the dissolution.
The insolvency practitioner’s attention should be specifically drawn to any impending dissolution to avoid the company being dissolved to the disadvantage of the liquidator [note 13].
If the official receiver has not made application to defer the dissolution, the Secretary of State may, on application of any other person who appears to be interested, make an order deferring the dissolution for such a period as the Secretary of State thinks fit.
17.85 Items received after handover
If after the handover, the official receiver becomes aware of additional information, which is relevant to the insolvency practitioner’s duties as liquidator or trustee, the official receiver should communicate it to the insolvency practitioner as soon as possible.
17.86 Court appointment
Where there has been a direct appointment by the court [note 14], the official receiver should ask the insolvency practitioner what records he/she has recovered, so that the official receiver can decide whether he/she needs to inspect them [note 15]. He/she should ensure that he/she has a documentary record of the items. In these cases there will be no handover of the estate as such and Rules 4.107 and 6.125, which provide for the insolvency practitioner’s undertaking to discharge the official receiver’s debit balance, will not apply. However, any current or future debit balance on the account will still have to be discharged by the insolvency practitioner out of any realisations; the official receiver should remind the insolvency practitioner of this by letter and preferably obtain a signed form of undertaking. The insolvency practitioner should also be notified of any known or probable expenses which are to be incurred (e.g. in connection with a public examination).
Where a liquidator or trustee is appointed, either at a meeting or by the Secretary of State, the official receiver should inform the directors, partners or bankrupt of the appointment. Notice should also be given to the former bankrupt in cases which are reopened and where appointments are made after discharge [note 16].
(Amended February 2014)
The official receiver’s insurance cover (including automatic insurance cover) must be cancelled after the estate has been handed over to a liquidator or trustee. The insurance should be cancelled within 5 working days of the handing over. Further information on cancelling insurance can be found in paragraph 49.27B.
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