FOI release

FOI22/23-126 - Trustees in Bankruptcy

Updated 30 May 2023

Our ref: FOI22/23-126

Date: 15 February 2023

Re: Freedom of Information Act 2000

Thank you for your email of 16 January in which you requested from the Insolvency Service:

“1. Do Trustees in Bankruptcy have the discretion to pay non-creditors either from bankruptcy funds or from their own resources?

1. Do Trustees in Bankruptcy have the power to “re-calculate” dividend after the dividend has been paid?

2. What provisions exist to prevent Trustees in Bankruptcy being intimidated or blackmailed?

3. What guidelines exist to control Trustees in Bankruptcy fees?

4. Does the Insolvency Service accept and consider anonymous complaints about Trustees in Bankruptcy where it is satisfied that such compliments are not vexatious?

5. What is the procedure?”

Your request has been dealt with under the Freedom of Information Act (FOIA).

I can confirm the agency holds the information that you have requested, and this information is available to you from the links provided in the answers below.

Question 1: One of the main purposes of an insolvency process is to ensure a fair distribution of the insolvent’s assets to the creditors. Where a bankruptcy order has been made, a creditor wishing to recover their debt must, subject to any order of the court, make a formal claim to the trustee Insolvency Act 1986 (legislation.gov.uk) Payments in a bankruptcy are made in a strict priority order and in accordance to the provisions laid in the Insolvency Act 1986. Insolvency Act 1986 (legislation.gov.uk)

Question 2: After all expenses in the bankruptcy have been paid in full, distributions are made to the creditors. Provisions regarding the calculation of those dividends are set in the Insolvency Act 1986 Insolvency Act 1986 (legislation.gov.uk) and the Insolvency (England and Wales) Rules 2016 https://www.legislation.gov.uk/uksi/2016/1024/part/14/made

Question 3: The Insolvency Code of Ethics provides that, where threats to compliance with the fundamental principles are identified, the trustee should consider whether there are any safeguards available to reduce the threat to an acceptable level. This includes intimidation threats, when a trustee may be deterred from acting objectively by threats, actual or perceived. https://www.gov.uk/government/publications/insolvency-practitioner-code-of-ethics

Question 4: Insolvency legislation provides that the remuneration and expenses of trustees in a bankruptcy are subject to the approval of the creditors in each individual case. The same rules establish that those creditors should be provided with sufficient information to enable them to make an informed judgement about the reasonableness of the fees being requested by the trustees. Ultimately, those fees are subject to the overall control of the court and creditors (and in certain circumstances and with the permission of the court, the bankrupt) have the power to challenge the trustees’ remuneration by application to the court. The Insolvency (England and Wales) Rules 2016 (legislation.gov.uk)

Questions 5 and 6: The Insolvency Service operates a Complaints Gateway, acting as a single point of contact for complaints and providing an independent and consistent assessment of complaints about insolvency practitioners. Complaints may be made by contacting the Insolvency Service, either by phone on 0845 602 9848 or by visiting Make a complaint to the Insolvency Service - GOV.UK (www.gov.uk) and completing an online form.

The Insolvency Service is not obliged to provide you with a separate copy of information it holds where that information is reasonably accessible to the applicant.

As such, the information you have requested is exempt from disclosure under section 21 of the Freedom of Information Act 2000, and your request is refused.

Complaints

If you are not satisfied with this response and would like us to reconsider our decision by way of an internal review (IR), please contact our Information Rights Team at foi@insolvency.gov.uk or by post at:

Information Rights Team

The Insolvency Service

3rd Floor

Cannon House

18 Priory Queensway

Birmingham

B4 6FD

United Kingdom

You also have the right to contact the Information Commissioners Office (ICO) if you wish for them to investigate any complaint you may have regarding our handling of your request. However, please note that the ICO is likely to expect an IR to have been completed in the first instance.

Kind regards

Information Rights Team

The Insolvency Service