Cash

Part 1 Cash

October 2012 

31.5.2 Collecting cash – general

The official receiver must take care when collecting cash from directors of companies, bankrupts or third parties to ensure that there are no disputes about the amounts involved at a later date.

 

31.5.3 Collecting cash – inspection

Any cash and/or cheques collected on inspection should be counted in the presence of the company director(s) or bankrupt. The official receiver should issue a temporary receipt for that amount to the company director(s) or bankrupt. The official receiver should obtain written confirmation of the amount paid over from the company director(s) or bankrupts. The official receiver should also note the amount of money, if any, retained by the bankrupt for his/her day to day living requirements (see paragraph 31.5.6). On returning to the office the monies collected should be handed to the appropriate member of staff and a formal receipt issued by them to the company director(s) or bankrupt. The written confirmation and formal receipt issued should be scanned and uploaded to appropriate WISDOM case file and indexed to the assets folder.  

 

31.5.4 Collecting cash - official receiver’s office

It is possible that company director(s) or a bankrupt will bring large sums of cash when he/she attends for interview. This possibility is increased where the company director(s) or bankrupt attends directly from court. The official receiver should establish the source of the monies and, in a bankruptcy, ask the bankrupt about his/her day to day living expenses (see paragraph 31.5.6). The official receiver should count the cash in the presence of the company director(s) or bankrupt once he/she is confident it forms part of the insolvent estate. The monies should be handed over to the appropriate member of staff and a formal receipt issued by them. If this is not possible the official receiver should put the cash in the office safe and issue a temporary receipt witnessed by another member of staff. The official receiver should send a formal receipt as soon as possible to the company director(s) or bankrupt. All receipts issued should be scanned and uploaded to the WISDOM bankrupt’s case file and indexed to his/her assets folder.

 

31.5.5 Collecting cash – additional considerations in bankruptcy

A bankrupt who attends the official receiver’s office directly from the court may have taken more cash than was necessary to pay for presenting his/her own petition. If this cash has been provided by one or more third parties for a specific purpose it does not form part of the bankrupt’s estate. However, if the money was a loan to the bankrupt, from whatever source, it would form part of his/her estate.

 

31.5.6 Collecting cash – bankrupt’s living requirements

When collecting cash from a bankrupt, either on inspection (see paragraphs 31.5.3) or at the office (paragraph 31.5.4), the official receiver should consider the amount required by the bankrupt before receiving his/her next salary or benefit payment. The bankrupt should be asked how much cash they require and to submit the estimate in writing. The official receiver should allow the bankrupt to keep the amount agreed as necessary to meet the bankrupt’s immediate living expenses. In general, cash from benefits should not be collected from the bankrupt. Where cash has been collected from the bankrupt a receipt should be issued (see paragraphs 31.5.3 and 31.5.4). 

 

31.5.7 Cash in hand – no longer legal tender

Some British cash is no longer legal tender, such as old £5 notes, £1 notes, 10 shilling notes, florins, shillings, sixpences, old 5 pence pieces etc. Notes can be exchanged by the Bank of England for their face value. Some local bank branches may exchange coins at their face value. However, the value of some notes and coins will be higher than their face value.

 

31.5.8 Collection of notes and coins that are no longer legal tender

The official receiver may collect notes and/or coins which are no longer legal tender from a company director or bankrupt either on inspection or at the official receiver’s office. The official receiver should issue a receipt (see paragraphs 31.5.3 and 31.5.4) to the company director or bankrupt. The receipt should list the notes or coins collected and clearly state that they are no longer legal tender. No attempt should be made to give a value to the items collected which should be stored in the office safe until such time as the official receiver has decided on their disposal (see paragraph 31.5.9).

 

31.5.9 Considering the sale of notes and coins that are no longer legal tender

The official receiver should consider whether a private sale would be the most appropriate method of realising notes and coins that are no longer legal tender. The matters the official receiver should consider when making this decision are the number of notes and coins collected, whether they form a note and/or coin collection, etc. The official receiver could obtain a rough valuation from sites such as e-bay before deciding to obtain a professional valuation (see paragraph 31.5.10). Where the official receiver considers the net proceeds from a private sale would be less than the face value of the notes and/or coins he/she should try and realise the monies in the following order:

  • notes should be paid into the estate account with the Insolvency Service’s bankers, where possible (see paragraph 31.5.11), or
  • notes can be returned to the Bank of England for exchange (see paragraph 31.5.12) and
  • for the realisation of coins follow the advice in paragraph 31.5.13.

 

31.5.10 Private sale of notes and coins/currency collections that are no longer legal tender

Where the official receiver decides to sell notes and coins privately adequate insurance should be arranged. The collection should be valued by a specialist in the field, who may be able to recommend an auctioneer to dispose of the items. The notes and/or coins should remain in the office safe until they are passed to an agent for disposal.

 

31.5.11 Notes to be paid into the estate account

The official receiver in the first instance should try and deposit notes that are no longer legal tender in the estate account. Our current bankers, April 2012, are prepared to accept notes that are no longer legal tender that are paid into the estate account. If the local branch refuses to accept the notes the official receiver should exchange the notes at the Bank of England (see paragraph 31.5.12). 

 

31.5.12 Exchanging notes at the Bank of England

Bank notes that are no longer legal tender and cannot be paid into the estate account can be exchanged at the Bank of England for face value either in person or by post. Applications By post should be addressed to Department NEX, Bank of England, Threadneedle Street, London, EC2R 8AH. For amounts of £1,000 or over the Bank of England require identification verification and proof of address. The official receiver should complete a “Business banknote exchanges form”, (obtainable here), even when attending in person. For notes collected from a company in liquidation, the official receiver should include a copy of the winding-up order. For notes collected from a bankrupt, the official receiver should include a copy of the bankruptcy order, notice of first meeting. and a letter of introduction if attending in person. The official receiver should exercise his/her judgement when deciding whether to send the application and notes by post and to which postal service to use, for example, Royal Mail Special Delivery.

 

31.5.13 Exchanging coins at a local branch of a bank

The Bank of England will not accept coins for exchange that are no longer legal tender. The Royal Mint is prepared to exchange such coins, but only from a limited number of companies and organisations. However some local bank branches may be prepared to exchange coins at face value and the official receiver should approach a local branch to exchange coins as and when required. If this is not possible a number of companies will exchange coins that are no longer legal tender at the Royal Mint for a commission. If the official receiver is unable to find a local bank branch that is prepared to exchange any coins and the total value is less than £100 he/she should return the coins to the bankrupt. If the total value of the coins is greater than £100 and the official receiver is unable to find a local bank branch that is prepared to exchange any coins he/she should consult Technical Section for further information.

 

31.5.14 Cash in hand – foreign currency

Where the official receiver collects foreign currency, either on inspection or in the office, a receipt should be issued (see paragraphs 31.5.3 and 31.5.4). The receipt should give the amount collected in the relevant foreign currency and not the exchange value in pounds sterling. Foreign currency should be stored in the office safe until it can be disposed of. The official receiver should pay any foreign currency collected into the estate account. The currency will be exchanged into pounds sterling by the Insolvency Service’s bankers at the current exchange rate.

 

31.5.15 Traveller’s cheques – security check

Where the official receiver deals with traveller’s cheques it is important that the following security checks are carried out before they are accepted. The traveller’s cheque should already be signed in the top left hand corner. The official receiver (as acceptor) should ask the company director(s) or bankrupt to countersign the cheque in the lower left hand corner. The official receiver should compare the signature and countersignature to see if they match. The company director or bankrupt can be asked to repeat the signature on the back of the cheque to allow a further comparison. Where the official receiver is not satisfied with the security check he should issue a receipt to the company director or bankrupt (see paragraphs 31.5.3, 31.5.4 and 31.5.17) and contact the issuer’s service department for further advice on realising the value of the traveller’s cheques.

 

31.5.16 Traveller’s cheques – already signed and countersigned

The official receiver may receive traveller’s cheques that have been both signed and countersigned, in which instance the security check would be inappropriate. The official receiver should issue a receipt to the company director or bankrupt (see paragraphs 31.5.3, 31.5.4 and 31.5.17). Where the traveller’s cheques have been signed and countersigned or claimed to have been lost or stolen (see paragraph 31.5.17) the official receiver should contact the issuer’s service department for further advice on realising the value of the cheques.

 

31.5.17 Cash in hand – traveller’s cheques

The official receiver on collecting traveller’s cheques together with any proof of purchase issued, either on inspection or in the office, should issue a receipt to the company director or bankrupt (see paragraphs 31.5.3 and 31.5.4). The receipt should state that the monies were received in the form of traveller’s cheques and state the face value of the cheques received. On being satisfied that the traveller’s cheque’s have been properly signed and countersigned (see paragraphs 31.5.15 and 31.5.16) the official receiver should pay the traveller’s cheques into the estate account. The proof of purchase would normally provide a list of the traveller’s cheque numbers issued to the company director or bankrupt which may assist in recovering the value of any lost or stolen traveller’s cheques.

 

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