Part 7 Bona Vacantia
Bona vacantia, defined as “goods found without any apparent owner”, is the term given to assets of dissolved companies [Note 1]. The ownership of any assets held by a company passes on its dissolution to the Crown, or the Duchies of Cornwall or Lancaster where the company’s registered office is in Cornwall or Lancashire [Note 2]. As a result of recent changes in county boundaries the official receiver should check with the Duchy Solicitor if he/she feels that a company’s registered office may be in the area covered by the Duchy. The addresses of the Treasury Solicitor (BV) and the Solicitor for the affairs of the Duchies of Cornwall and Lancaster are shown in Annex 3.
Where any assets of the company are inadvertently realised after dissolution the net proceeds should be paid to The Treasury Solicitor (BV) or the Duchy Solicitor. The official receiver should provide details of the agent’s charges deducted from the sale proceeds to enable the Solicitor to decide whether or not to challenge these costs. The official receiver should not charge any fees in relation to these bona vacantia monies.
The official receiver on discovering that he/she has sold assets after dissolution should pay the funds into the Insolvency Service Account. Once in the Insolvency Service Account the monies are then paid into the estate account, which is re-opened if necessary. Estate Accounts Services then pay the monies into an Insolvency Service Treasury Solicitor account where a bulk payment is made to the relevant Solicitor every 6 months.
The official receiver should apply to the court (see part 10) for the restoration of the company to the register where the assets of the dissolved company are in excess of £3,000. Where the assets have not been realised or amount to a long-term realisation it is unlikely that The Treasury Solicitor (BV) will make a grant (see paragraphs 38.60 and 38.69) as there are no liquid funds available. The official receiver will therefore need to make an application for the restoration of the company. Once the company has been restored the official receiver will automatically become liquidator and may then deal with the realisation and distribution of the assets.
Where a dissolved company has assets valued at less than £3,000 and can be restored to the register (see paragraph 38.84) [Note 3], the official receiver, as the former liquidator, may apply to The Treasury Solicitor (BV) for a discretionary grant. The Treasury Solicitor (BV) will usually only consider making a grant from monies already received. The Treasury Solicitor (BV) will only make one grant in respect of the dissolved company.
The official receiver’s application must be supported by a Statutory Declaration which includes all of the following:
1. that the official receiver was liquidator at the date of dissolution,
2. an undertaking that the official receiver will not apply for the company to be restored,
3. that any grant will be distributed as if the official receiver was still liquidator of the company,
4. that the official receiver acknowledges that The Treasury Solicitors (BV) proper legal costs plus disbursements will be deducted from any grant,
5. that a 5% reservation (where the grant is over £750) will be deducted from any grant, and
6. who the cheque should be made payable to.
The Statutory Declaration must be witnessed by a practising solicitor or commissioner of oaths.
The official receiver’s application must also include:
1. The full registered name and number of the dissolved company
2. The last registered office of the company
3. The date of dissolution of the company
4. If the asset is not money, full details of the type of asset, and evidence that the company owned it at the date of dissolution
5. Evidence of appointment as liquidator
6. The necessary proof of identity, e.g. a copy of the winding-up order
If there is cash at bank the official receiver should also provide details of the company’s bank account, including the sort code, account number and address.
If the official receiver has any claim against a third party for losses suffered as a result of the dissolution then the application will not be considered until the matter has been resolved.
Finally, whether any tax would be payable if the asset had been dealt with during trading or in the process of winding-up.
The official receiver’s application will be considered on its merits and if The Treasury Solicitor (BV) is not satisfied no grant will be made. If a grant is made the official receiver will be required to pay the costs of The Treasury Solicitor (BV); VAT is not charged on these costs which are currently £200. The official receiver may check here for details of the current charges.
In deciding whether or not to make a grant The Treasury Solicitor (BV) will consider
1. the size and nature of the bona vacantia asset,
2. what other remedies may be available to the official receiver,
3. the extent the official receiver contributed to the asset becoming bona vacantia,
4. whether there would have been any tax payable if the asset had been dealt with during trading or in the process of winding-up,
5. any third party rights to the asset, and
6. who (if anyone) is in possession of the asset.
Although the official receiver will have given an undertaking not to restore the company to the register this does not preclude an application being made by another interested party [Note 4]. If the company is restored to the register, The Treasury Solicitor (BV) will be called upon to account for the assets to the official receiver as liquidator. The Treasury Solicitor (BV) therefore makes a reservation of 5% of the value of the grant (after deducting costs), which is not repayable, to enable him/her to account for the assets in the event of restoration.
If The Treasury Solicitor (BV) approves the official receiver’s application the monies should be dealt with as a normal asset realisation. The official receiver should ensure that the appropriate fees are charged, that all his/her costs are paid and any surplus monies distributed to creditors in the usual way (see chapter 36, part 1).
The Treasury Solicitor has a website devoted to bona vacantia issues, it may be accessed here.
(Amended April 2010)
When a dissolved company cannot be restored to the register (see paragraph 38.84) [Note 5], the official receiver, as the former liquidator, may also apply to The Treasury Solicitor (BV) for a discretionary grant. The application for the discretionary grant is made in the same way as in the case where the company can be restored (see paragraphs 38.61 to paragraph 38.65). The £3,000 limit does not apply (see paragraph 38.60) however the Treasury Solicitor (BV) will usually consider only making a grant from monies already received. The Treasury Solicitor (BV) will only make one grant in respect of the dissolved company.
The Treasury Solicitor (BV) will make a grant to alleviate hardship, it would otherwise be unreasonable or unconscionable for the Crown to keep the assets or where there is a compelling public interest in making the grant.