Bankruptcy
September 1997
Note – Transitional provisionThe Insolvency (Amendment) Rules 2010 (IAR) came into force on 6 April 2010 and have had some effect on cases where a bankruptcy order is made on a petition presented on or after 6 April 2010. The relevant paragraphs have been updated to reflect the changes and information is provided to show when they apply. Further details regarding the application of the transitional provisions can be found at Annex A.
48.25EA Vacation of office of Trustee on completing bankruptcy
Where it appears to the trustee that the administration of the bankrupt's estate is complete, he/she has a duty to summon a final meeting of the bankrupt's creditors to receive the trustee's report of his/her administration and determine whether the trustee should have his/her release. The trustee must give at least 28 days notice of the final meeting to all creditors of which he/she is aware and the bankrupt. The trustee may apply to the court to be relieved of the duty to send notice to all creditors of which he/she is aware. In considering the application, the court shall have regard to the cost of carrying out the duty, to the amount of the assets available and to the extent of the interest of creditors, or any particular class of them.
For post 6 April 2010 petition cases the trustee must also gazette a notice of the final meeting and may additionally advertise it in another manner. The IAR specifies the content to be included in the published notices. The rules now also state that the final meeting must not be held unless at least 8 weeks before the meeting the trustee sends to all known creditors a draft of the report he/she intends to lay before the meeting together with a statement of the creditor’s right to request further information and to challenge the trustee’s remuneration and expenses. This is as required by rule 6.78B. Where a creditor does apply to court to challenge the remuneration or expenses under rule 6.142, the final meeting may not be held until the application has been disposed of.
The trustee must give at least 21 days notice of his/her intention to vacate office to the official receiver together with notice of any creditors' meeting. The notice must contain details of any property which has not been realised, distributed or otherwise dealt with in the bankruptcy.
The trustee’s report laid before the meeting must contain a summary of the trustee’s receipts and payments and, for post 6 April 2010 petition cases, details of his/her remuneration and expenses. At the final meeting, the creditors may question the trustee on any matter contained in his/her report. The trustee shall give notice to the court that the final meeting has been held and the notice shall state whether or not he/she has been given his/her release. If there is no quorum present at the final meeting, the trustee shall report to the court that a final meeting was summoned, but there was no quorum present and the final meeting is deemed to have been held and the creditors not to have resolved against the trustee having his/her release.
The trustee is prohibited from convening a final meeting of creditors where there is comprised in the bankrupt's estate property consisting of an interest in a dwelling house which is occupied by the bankrupt or his/her spouse or former spouse or by his/her civil partner or former civil partner and the trustee has been unable to realise that property, unless:
Notes: [s331][r6.137(1)] [r6.137A][r6.137(1A) and (1B) for post 6 April 2010 petition cases] [r6.137(1C), r6. 78B, r6.142] [r6.145][6.137(2) as amended by IAR][r6.137(4)][r6.137(5)][s332][s313]
48.26EA Removal of Trustee by creditors’ meeting
The provisions relating to bankruptcy are similar to those for liquidations, as set out in paragraphs 48.13. The trustee of a bankrupt's estate may be removed from office only by an order of the court or by a general meeting of creditors summoned specially for that purpose. If a general meeting of creditors is summoned for the purpose of removing the trustee, a copy of the notice of the meeting should be sent to the official receiver. A trustee has a duty to summon a general meeting when requested to do so by one tenth in value of the bankrupt's creditors, including the creditor making the request. A general meeting of creditors may be summoned for the purpose of replacing the trustee. Where the creditors resolve that the trustee should be removed, the official receiver shall file in court the certificate of removal and the resolution is effective from the date it is filed. The official receiver must also send a copy of the endorsed certificate to the removed trustee and the new trustee (if any) The official receiver will endorse the certificate so that where the meeting has appointed another trustee, he/she can match the dates of removal and the new appointment thereby avoiding the official receiver technically coming into office to fill a vacancy in any interim period. If the trustee was appointed by the court or the Secretary of State, a creditors' meeting may only be summoned for his/her removal if the trustee agrees, the court directs or if requisitioned by not less than one quarter in value of the creditors.
Notes: [s298(1)][r6.129][r6.131][s314(7)][s298(4)]
48.27 Removal of trustee by Secretary of State
If the trustee was appointed by the Secretary of State, he/she may be removed by a direction of the Secretary of State. If the Secretary of State decides to remove the trustee, he/she must first notify the trustee and the official receiver of his/her decision and the grounds for it. He/she should also specify the period within which the trustee may make representations against his/her decision. Any removal should be notified to the trustee and the official receiver and filed in court.
Notes: [s298(5)] [r6.133]
48.28 Removal of trustee by court
(Amended December 2010)
A trustee may be removed from office by an order of the court. The court may dismiss the application if it thinks that no sufficient cause is shown but it cannot do so unless the applicant has had an opportunity to attend a hearing. If the application is not dismissed, the court must fix a venue for it to be heard although it may require the applicant to make a deposit or give security for the costs to be incurred by the trustee. At least 14 days before the hearing, the applicant must send the trustee and the official receiver notice of the venue, together with a copy of the application and of any evidence in support. Where the court removes the trustee, it shall send copies of the order of removal to him/her and to the official receiver. The costs of the application are not payable out of the estate unless the court orders otherwise.
Notes: [r6.132 as amended by the Insolvency (Amendment) Rules 2010]
(Amended December 2010)
The circumstances when a trustee may resign from office are as stated in paragraph 48.16 and the trustee must similarly summon a meeting of creditors to accept his resignation. The notice to creditors should be accompanied by an account of his/her administration including a receipts and payments account and a statement that he/she has reconciled the account with the account held by the Secretary of State. A copy of the notice should be sent at the same time (being at least 21 days before the meeting in pre 6 April 2010 petition cases) to the official receiver together with a copy of the accounts. The official receiver must also be notified of any property of the bankrupt which has not been realised or fully dealt with together with details of its value and location.
For post 6 April 2010 petition cases the IAR amended the notice provisions requiring that at least 28 days notice of the meeting must be given to the creditors by the trustee. The notice to creditors must also be accompanied by a progress report for the period from the date of the trustee’s appointment or the end date of the last progress report, to the date of the meeting. The notice summoning the meeting must indicate that the purpose (or one of the purposes) of the meeting is to receive the trustee’s resignation, and draw the attention of the creditors to the provisions regarding their ability to make a claim for excessive remuneration and expenses.
If there is no quorum present at the meeting to receive the trustee's resignation, the meeting is deemed to have been held and a resolution is deemed to have been passed that the resignation is accepted. The exception to this is in post 6 April 2010 petition cases where an application made to the court under rule 6.126A (creditor’s claim that remuneration and/or expenses are excessive) has not been disposed of (see paragraph 48.29A).
The chairman of the meeting should within 3 business days of the date of the resolutions send a copy of the resolutions passed at the meeting to the official receiver. If the trustee's resignation is accepted at the meeting, the chairman shall send to the official receiver a copy of the notice required by section 298(7). The trustee's resignation is effective from the date on which the official receiver files the copy notice in court and that date is to be endorsed on the copy notice. If the creditors resolve to appoint a new trustee, the certificate of his appointment will also be sent to the official receiver and the endorsements on the certificates will be matched to avoid the official receiver technically coming into office to fill a vacancy in any interim period.
If the resignation is not accepted by the creditors, the trustee may apply to the court for an order giving him/her permission to resign. The court will determine the date from which the trustee' release is effective and send two copies to the trustee who should send one copy to the official receiver. If the official receiver becomes aware that the trustee is intending to resign, he/she should liaise with IP Unit, London and consider whether it is necessary to request the delivery up of the insolvent's records and the administration records (see paragraph 10.35) particularly if a successor trustee is to be appointed. If the case is not suitable for a Secretary of State appointment (see chapter 17, part 5), the official receiver will need to take appropriate action to protect and deal with any unrealised property (see paragraph 48.36).
Notes: [r6.126][r6.126(2)][r6.145][r6.126(5)][r6.127 as amended by the Insolvency (Amendment) Rules 2010][r6.128]
48.29A Resignation of trustee – claim for excessive remuneration pending
(December 2010)
Rule 6.126A was introduced by the Insolvency (Amendment) Rules 2010 (IAR) and applies to post 6 April 2010 petition cases. The rule deals with the position where a meeting has been summoned to receive the trustee’s resignation for a date when an application under rule 6.142 to challenge the trustee’s remuneration and/or expenses has not been disposed of by the court. If at the meeting the trustee’s resignation is accepted, the meeting must be adjourned to a day not less than 14 days after the day on which the application under rule 6.142 has been disposed of, and creditors must be given at least 14 days notice of the adjourned meeting by the trustee.
If at the original meeting of creditors the trustee’s resignation was accepted, at the adjourned meeting a revised version of the account which accompanied the original notice of the meeting must be presented, showing any changes required as a result, or arising out of the rule 6.142 application, and a resolution must be put for the release of the trustee. If there is no quorum present at the adjourned meeting, the meeting is deemed to have been held and the creditors are deemed to have resolved that the trustee be released. The chairman of the meeting must then send a certificate, showing that the creditors have accepted the trustee’s resignation, and a copy of the revised account to the official receiver. It is the official receiver’s duty to file a copy of the certificate in court.
If at the meeting the trustee’s resignation is not accepted, the trustee must not summon any further meeting until the application under rule 6.142 has been disposed of.
Notes: [r6.126A] [r6.142 as amended by the Insolvency (Amendment) Rules 2010]
(Amended December 2010)
Notice of the death of the trustee should be given to the official receiver by the trustee's personal representative or if the deceased trustee was a partner in, or an employee of, a firm, by a partner who is qualified to act as an insolvency practitioner. Notice of the death may also be given by any person producing a copy of the death certificate. The official receiver will give notice of the death to the court for the purpose of fixing the date of the deceased trustee's release. The official receiver acts as trustee during any vacancy. On becoming aware of the death of the trustee, the official receiver should liaise with IP Unit as detailed in paragraph 48.17. He/she may call a general meeting to fill the vacancy but if he/she fails to do so within 28 days he must refer the matter to the Secretary of State (see chapter 17 Part 6). When the official receiver becomes trustee as the result of the death of an insolvency practitioner, if there are no subsequent appointments, he/she should apply for his/her release in the usual way (see paragraph 37.11).
For post 6 April 2010 petition cases there are rules allowing for a block transfer of cases to be completed where an insolvency practitioner has died (rules 7.10A – 7.10D). See Chapter 55 – Insolvency practitioners, paragraph 55.14A for further information on block transfer of cases.
Notes: [r6.143(2) as amended by the Insolvency (Amendment) Rules 2010]
A trustee automatically vacates office if he/she ceases to be qualified as an insolvency practitioner. When the official receiver becomes aware that the trustee is no longer qualified, he/she should liaise with IP Unit and follow the procedures as detailed in paragraph 48.18.
For post 6 April 2010 petition cases there are rules allowing for a block transfer of cases to be completed where an insolvency practitioner is unable to continue in office (rules 7.10A – 7.10D). See Chapter 55 – Insolvency practitioners, paragraph 55.14A for further information on block transfer of cases.
Notes: [s298(6) & r6.144]
48.32 When release takes effect
A trustee shall have his/her release as follows:
When the Secretary of State gives the release, he/she shall certify it accordingly and send the certificate to the official receiver to be filed in court. A copy of the certificate shall be sent by the Secretary of State to the former trustee, whose release is effective from the date of the certificate.
The release of the trustee discharges him/her from liability in respect of acts or omissions of his/hers in the bankruptcy or otherwise in relation to his/her conduct. The trustee is protected from action under section 304 unless the leave of the court is obtained.
Notes: [s331][r6.137(6)][r6.137(5)][r6.135(2)][r6.135(3) as amended by the Insolvency (Amendment) Rules 2010] [r6.135(1)] [r.6.143(4)] [r6.144(3)] [s299(4)][r6.135(4)(5)][s299(5)]
48.33 Trustee’s duties on vacating office
A trustee on vacating office has similar duties as detailed in paragraph 48.21. He/she has an obligation to deliver up to the person succeeding him/her the assets of the estate, the records of the bankruptcy and the bankrupt's books and records.
Notes: [R27(2)IR 1994]
Pursuant to Regulation 28 of the Insolvency Regulations 1994, the trustee on vacating office has a requirement to submit an account of his/her receipts and payments to the Secretary of State (see paragraph 48.23).
48.35EA Official receiver’s role during any vacancy
Following the removal of the trustee, or any vacancy in office, the official receiver shall be the trustee until the vacancy is filled. Following the release of the trustee, the official receiver will be required to deal with any assets which later become available to the estate. The official receiver may summon a general meeting of the bankrupt's creditors for the purpose of filling the vacancy but if he/she fails to do so within 28 days, he must refer the matter to the Secretary of State (see Chapter 17 Part 6). If another trustee is to be appointed, the official receiver should consider whether or not he/she needs to collect the accounting and administration records. If there is a successor insolvency practitioner appointment, the official receiver should ascertain which of the records are required to complete the administration of the estate and recover them. In relation to property which is subject to a restriction at the Land Registry, the official receiver will need to ensure that the property is recorded on ISCIS and also lodge his own restriction since he/she will not be able to rely on the restriction lodged by the trustee (see also paragraphs 50.52 and 50.53).
Notes: [s300] [s300(3)]
Due to the updating of advice and guidance in this part, the information previously contained in this paragraph is no longer available.
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