18. Statement of Affairs
Guidance on requiring and submission of statements of affairs and further accounts.
The forms to complete a statement of affairs can be found on GOV.UK
18.1 Introduction
A statement of affairs is a document verified by a statement of truth which sets out details of the company’s or bankrupt’s assets, debts and liabilities together with details of security held by creditors.
This chapter provides guidance to the official receiver in deciding when and how they should seek to obtain a statement of affairs or other further statement or account, when dealing with company liquidations and bankruptcies.
18.2 Official Receiver’s discretion
In a winding up by the court the official receiver has discretion as to whether or not to require a statement of affairs [section 131(1)].
In bankruptcy, except where the order was made on a bankruptcy application to the Adjudicator, the official receiver may at any time before the discharge of the bankrupt require the bankrupt to submit a statement of affairs [section 288(1)].
18.3 Explanation of terms
From 6 April 2010, the term “deponent”, which previously appeared throughout the rules referring to the person submitting a statement of affairs, has been replaced by the terms “nominated person” and “person making the statement of affairs”.
A ”nominated person” is defined1 as a person who has been required2 to make out and submit a statement of the affairs of a company being wound up by the court [rule 1.2; section 131].
18.4 Preparing a statement of affairs
The basic work preparing a statement of affairs is to be completed by the nominated person or the bankrupt. A member of the official receiver’s staff should only assist in exceptional circumstances, where the person is unable to complete the forms themselves and and has no one else to assist them.
18.5 Acknowledgement of assistance
Where a member of the official receiver’s staff gives guidance in the preparation of a statement of affairs, they should ensure that the nominated person or the bankrupt acknowledges, in writing:-
- that guidance has been given but that the statement has been completed based on information which the nominated person or the bankrupt has provided, and
- that the nominated person or bankrupt accepts full responsibility for the contents of the statement.
The acknowledgement should be attached to all copies of the statement of affairs.
18.6 Examination of statement of affairs
The statement of affairs submitted should be checked for obvious inaccuracies and omissions and tested against the information in the inspection report, preliminary information questionnaire, the company’s or bankrupt’s records, proofs of debt and notifications of claims. Material discrepancies should normally be referred back to the person who made the statement of affairs for explanation and, in serious cases; the official receiver should require further information or accounts from them (see “Further Accounts”). As a last resort, the person who made the statement of affairs may be called for public examination.
18.7 Potential offences evidenced by statement of affairs
Where material discrepancies exist, the official receiver should consider whether there is a possible offence of misconduct in the proceedings or a material omission in the statement of affairs [sections 208, 210, 353, 354, 356].
Where a bankrupt has failed to comply with their obligations in relation to the statement of affairs, the official receiver should consider applying to court to suspend the automatic discharge period.
If the official receiver is considering an offence of concealment or non-disclosure, the statement of affairs can be used notwithstanding the European Court of Human Rights judgment in the case of Saunders [1997] BCC 872.
18.8 Release from duty or extension of time to submit statement of affairs
Requesting a statement of affairs is rare and therefore it should not be necessary for the official receiver to consider the release of the nominated persons or the bankrupt from the requirement to lodge a statement of affairs [section 131(5); section 288(3)].
The nominated person or bankrupt may have a reasonable excuse to justify a request to be released or to have an extension of time in which to submit the statement of affairs. Ill health is one example of a reasonable excuse.
The discretion to release is a wide one and may be exercised even where there has been no material change in circumstances. If the official receiver decides to grant a release or allow an extension of time, they should inform the nominated person or bankrupt in writing.
Written notification can include e-mail provided that the recipient has consented to electronic delivery of documents and provided an electronic address for delivery [rule 1.45].
18.9 Request for release or extension of time
The official receiver should ask that any request for release from the duty, or an extension of time, to submit the statement of affairs, be made in writing, stating the reasons the release or extension is required. If the official receiver refuses the request, the nominated person or the bankrupt may apply to the court [rule 7.44; rule 10.58].
18.10 Notification of refusal
There is no specific requirement to give the nominated person or the bankrupt a reason for refusal. On the grounds of fairness the official receiver should give a brief, written notification, of the grounds for refusal of the request.
18.11 Application to the court
The court may simply dismiss the application for release or extension of time if it thinks the applicant (the nominated person or the bankrupt) has given insufficient reason for the application [rule 7.44(3); rule 10.58(3)]. If the court decides not to dismiss the application, it will fix a date for a hearing and the applicant is required to provide the official receiver with a copy of the application and supporting evidence, at least 14 days before the date of the hearing [rule 7.44(5); rule 10.58(5)]. The official receiver may be heard on the application and should normally attend the hearing or file a written report of any matters which the official receiver considers ought to be drawn to the court’s attention [rule 7.44 (6); rule 10.58(6)].
The applicant must meet their own costs of the application, but the court may order their reimbursement out of the estate [rule 7.44 (9); rule 10.58(9)].
18.12 Official receiver’s report
The official receiver may file a report in relation to the application, whether or not the official receiver intends to appear at the hearing. The report should set out the reasons for the official receiver’s refusal to grant a release or an extension of time and should seek to rebut the evidence the applicant intends to use in support of their application. A copy of the report must be sent to the applicant within 5 business days of the hearing [rule 7.44 (7); rule 10.58(7)]
18.13 Limited disclosure of statement of affairs
On rare occasions disclosure of information contained in a statement of affairs will place a person at risk of violence or prejudice the realisation of assets (e.g. revealing valuations placed on specialist equipment which is in the course of being sold). The official receiver may apply to the court for an order that the statement of affairs, in whole or part, is not filed with Companies House (in company cases) or not filed on the court file (in bankruptcy cases) [rule 7.43; rule 10.57(a)].
In bankruptcies the court may order may be that the statement, or the specified part of it, be filed separately so that it is not open to public inspection without the permission of the court [rule 10.579(b)]. It is not expected that the official receiver will often find it necessary to make use of this provision. The provisions for winding up and bankruptcy mirror those for administrations and administrative receiverships, where they are more likely to be used to protect the value of a business which is being sold as a going concern. See also paragraph 18.26.
18.14 Statement of affairs from other insolvency proceedings
Where there have been other insolvency proceedings immediately prior to the winding-up order, the statement of affairs submitted in those proceedings may give adequate information for the purposes of the winding up.
In assessing whether a new statement of affairs is required, the official receiver should take into consideration the length of time since the previous insolvency proceedings commenced and whether or not the company continued trading during those proceedings.
Generally, if there has been a short period of time since the previous insolvency proceedings and no further trading, there will be minimal, if any, changes to the company’s position.
18.15 Report to creditors and contributories
The official receiver can issue the report to creditors and contributories on the basis of the statement of affairs lodged in the other proceedings, if the position of the company has not changed. Where no statement of affairs exists the official receiver should use the relevant information contained in the preliminary information questionnaire (PIQC), relating to assets and liabilities when preparing his report to creditors. It is not necessary to request a statement of affairs to obtain information to complete a report to creditors.
18.16 Consider preferential claims
It should be borne in mind that if the company has been subject to previous insolvency proceedings this will affect the relevant date in relation to preferential claims [section 387].
18.17 Decision whether a statement of affairs is required
A statement of affairs will not be required in every company case. In general, the decision to require a statement of affairs will be taken at the time that the Conduct Assessment Record (CAR) is considered.
The official receiver may decide that a statement of affairs is required (due to the action or inaction of the officers of the company) in order to identify, collect, secure and protect the assets of the estate; to ensure a proper preliminary examination of the affairs of the company or generally to fulfil the official receiver’s duties. The reasons for the official receiver’s decision to request a statement of affair should be set out in the CAR.
The official receiver should consider the usefulness of obtaining a statement of affairs before this time only if the circumstances merit it. For example, if there is a dispute about the identity of the creditors, the amount or nature of the company’s debts, the company’s assets or if prosecution or disqualification proceedings are identified at an early stage.
18.18 Choice of nominated person(s)
Where the official receiver decides that a statement of affairs is required, they will also have to decide who is to lodge it. It will normally be sufficient to require a statement of affairs to be submitted by the director principally concerned in the management of the company’s affairs.
18.19 Possible nominated persons
Where there is no director or other current company officer on who notice to lodge a statement of affairs can be served, the official receiver may consider serving notice the next most appropriate person with the necessary knowledge to submit a statement of affairs. A request to submit a statement of affairs can be made to [section 131(3)]:
- former officers of the company,
- anyone who, in the year before the winding up order, has taken part in the formation of the company,
- current employees and former employees (in the year before the winding up order) who are, in the official receiver’s opinion, capable of giving the information required,
- officers or employees (in the year before the winding up order) of a company which was an officer of the company in liquidation.
Where a provisional liquidator was appointed, the year runs from the date of the provisional liquidator’s appointment not the date of the winding-up order.
18.20 Definition of “officer”
An “officer” is defined as including a director, manager or secretary of the company [section 251, incorporating section 1173 Companies Act 2006].
18.21 Consultant engaged by company
Anyone under a contract for services to the company falls within the definition of an “employee” [section 131(6)] and can be required to submit a statement of affairs. This provision potentially allows for a consultant, accountant or auditor to be required to submit the statement provided they were engaged under a contract for services.
18.22 Auditors
An auditor appointed under part 16, chapter 2 of the Companies Act 2006 can, for the purposes of section 13 [R v Shacter [1960] 2QB 252, CAA], be regarded as an officer of the company1. An auditor appointed for a limited purpose may, depending on the terms on which he was employed, fall within the term “employee” (see paragraph 18.21). An auditor should only be required to submit a statement of affairs only as a last resort and only where their level of involvement with the company was sufficient for the official receiver to consider the auditor has the necessary knowledge of the company’s affairs. If an auditor requests an allowance for the preparation of the statement of affairs, this should be made where the allowance is reasonable and if funds are available (see paragraphs 18.52 to 18.55).
18.23 Notice to submit a statement of affairs
The notice to submit a statement of affairs [rule 7.40] may be sent to the nominated person by post or e-mail (if they have consented to electronic delivery and provided an electronic address [rule 1.45]). The forms to submit a statement of affairs are available on the internet at GOV.UK https://www.gov.uk/government/publications/rule-741-statement-of-affairs-company-winding-up The nominated person should be directed to the website but must be told of their right to request hard copies and how this should be done. Alternatively they can be served personally. The forms may be handed to the nominated person when they attend for interview, if the decision has been made at that stage that a statement of affairs is required.
The official receiver should only issue the notice requiring a statement of affairs to those persons who would, or reasonably should, have the necessary information to submit the statement of affairs.
18.24 Time for compliance
The notice will give a date by which the statement of affairs must be submitted. The statement must be submitted within 21 days of the notice being received [section 131(4)], unless a longer period has previously been agreed. Acknowledgement of the receipt of the notice should be obtained in all cases.
Where the notice is sent by post the deemed date of receipt is the second business day after after the day on which it is posted (first class) and the fourth business day after the day on which it is posted (second class) . For electronic delivery documents sent before 4.30pm are received on the same day [rule 1.42; Civil Procedure Rules, part 6]. This needs to be taken into account when setting the date for submission of the statement of affairs.
18.25 Submission
The statement of affairs must be verified by a statement of truth [section 131(2A); rule 7.41(5)] and submitted to the official receiver with a copy [rule 7.41(6)], although a statement of affairs should not be rejected if a copy is not supplied. Immediately after the verified statement of affairs is received, having made a copy to be retained on file, the official receiver must send the verified copy of the statement of affairs and any statements of concurrence (see paragraph 18.28) to Companies House [rule 7.41(7); Companies House form F4.41] (subject to information which must be withheld, see paragraph 18.26)
18.26 Withholding personal information of employees and consumers
In completing the statement of affairs the nominated person should list in a separate schedule the names, addresses, amounts owed to them and details of any security held of employees, former employees and consumers who have paid in advance for good or services not supplied [rule 7.41(2),(3)]. This information is withheld from the document filed at Companies House.
The creditors list filed at Companies House with the statement of affairs must show the total number of employees or former employees and the amounts owed to them and the total number of consumers who have paid in advance and the amounts owed to them [rule 7.41(4)].
Failure to comply
The nominated person’s failure to comply with his duty to submit a statement of affairs, without a reasonable excuse, makes him liable to a fine and a daily default fine to be imposed by the court, on conviction for this offence [section 131(7)]. There is no limit on the fine which may be imposed on conviction on indictment [schedule 10]. Details of the action to be taken on a nominated person’s failure to submit a statement of affairs is covered in chapter 19.
18.28 Statements of concurrence verified by a statement of truth
Where a statement of affairs is lodged the official receiver may require a statement of concurrence from any other person who may otherwise be required [section 131] to submit a statement of affairs; whether or not the person has actually been required to do so [rule 7.42]. The official receiver should provide the person concerned with a copy of the statement of affairs with which they are being asked to concur, together with two copies of a statement of concurrence verified by a statement of truth for completion and return.
18.29 Submission of a statement of concurrence verified by a statement of truth
The statement of concurrence should be submitted within a specified time limit. The official receiver must also send the verified statement(s) of concurrence to Companies House and place a copy on the file.
18.30 Statement of non-concurrence verified by a statement of truth
A person who does not agree with or accept the contents of a statement of affairs to which they are being asked to concur they may qualify their statement of concurrence accordingly [rule 7.42(5)(b)]. This is known as a statement of non-concurrence and should be sent to Companies House. If there are substantial differences between the parties, it is often more sensible and straightforward to require each person to submit their own statement of affairs (without attempting to have either person concur with the other’s document). It may be necessary to summarise each statement of affairs in any report to creditors which may be issued after submission.
18.31 Provisional liquidator appointed
Where the court has appointed a provisional liquidator [section 135] notice may still be given at any time by the official receiver to request a statement of affairs [section 131]. If an insolvency practitioner is appointed as provisional liquidator the official receiver should request a statement of affairs where the provisional liquidator advises that it would be beneficial, although the decision as to whether to require one remains that of the official receiver.
18.32 Continuance of requirement if order made
Where a statement of affairs is required after the appointment of a provisional liquidator and a winding-up order is subsequently made, the requirement to submit a statement of affairs remains and there is no need to serve any further notice.
18.33 Date to which statement made up
The date to which a statement of affairs is to be made up will normally be that of the winding-up order or, if a provisional liquidator was appointed, the date of their appointment [section 135]. Where there have been previous insolvency proceedings (i.e. voluntary winding up, administration, administrative receivership or company voluntary arrangement), the statement will usually be made up to the date on which those proceedings effectively commenced. In cases where a statement of affairs was lodged in earlier proceedings, it might be used in the winding up (see 18.15), unless for example, the company continued to trade. It will be the responsibility of the insolvency practitioner dealing with the earlier proceedings to account for the company’s dealings after that date.
Orders on the petition of creditor or insolvency practitioner
Note: For orders made on the application of the debtor see paragraph 18.41.
18.34 Submission
A petition for bankruptcy may be presented to the court by an individual’s creditor(s) or the supervisor of an individual voluntary arrangement [section 264]. The official receiver, at any time before the bankrupt’s discharge, may require a bankrupt to submit a statement of affairs [section 288(1)]. The statement of affairs must be verified by a statement of truth and be submitted to the official receiver with a copy [rule 10.56(3)]. In practice the official receiver will accept the original statement of affairs and make their own copy.
18.35 Statement of affairs from other insolvency proceedings
If a voluntary arrangement has immediately preceded the bankruptcy order, the official receiver may decide that the statement of affairs submitted in those proceedings has adequate information for the purposes of the bankruptcy. If the individual traded after the voluntary arrangement was approved, the official receiver may consider that a new statement of affairs should be submitted.
18.36 Duty to submit statement of affairs
It will be rare for the official receiver to require a statement of affairs. The relevant information contained in the preliminary information questionnaire (PIQB), relating to assets and liabilities can be relied upon to prepare the report to creditors.
In general, the decision to require a statement of affairs will more likely be taken at the time that the Conduct Assessment Record (CAR) is considered and a decision made whether further investigation should be undertaken.
The official receiver may decide that a statement of affairs is required due to the action or inaction of the bankrupt in order to identify, collect, secure and protect the assets of the estate, or generally to fulfil the official receiver’s duties.
The official receiver should consider the usefulness of obtaining a statement of affairs before this time only if the circumstances merit, for example, there is a dispute about the identity of the creditors, the amount or nature of the bankrupt’s debts, the bankrupt’s assets or if prosecution or bankruptcy restriction proceedings are identified at an early stage.
Should a statement of affairs be required and provided; if the official receiver has previously reported to the creditors, there is no need to send a further report to creditors unless there are additional matters which ought to be brought to their attention [rule 10.66(3)(4)].
18.37 Notice Service of forms
Where the official receiver requires the bankrupt to provide a statement of affairs [section 288], the official receiver must deliver a notice to the bankrupt headed “Notice requiring statement of affairs”. The notice must [rule 10.55(2)(a-c)]:-
- require the bankrupt to prepare and submit to the official receiver a statement of affairs;
- inform the bankrupt of the date by which the statement must be delivered; and
- include the effect of the penalty for non-compliance [section 288(4)] and the bankrupt’s duty to co-operate [section 291];
- include instructions for the preparation of the statement of affairs [rule 10.55(3)].
The forms to submit a statement of affairs are available on the internet at GOV.UK www.gov.uk/government/publications/rule-1055-and-1056-statement-of-affairs-bankruptcy. The bankrupt should be directed to the website but must be told of their right to request hard copies and how this should be done. The notice may be delivered to the bankrupt electronically (if they have consented to electronic delivery and provided an electronic address). Alternatively the bankrupt can be served personally [rules 1.42; 1.44; 1.4 ; 1.48]. The notice may also be handed to the bankrupt at interview, if the decision has been made at that stage that a statement of affairs is required.
18.38 Procedure when lodged
The official receiver must upon receipt of the verified statement of affairs file it with the court retaining a copy for the official receiver’s file [rule 10.56(4)].
18.39 Penalty for Non-Compliance
The bankrupt who fails to comply with he request to submit a statement of affairs, without reasonable excuse (for example, ill-health), is guilty of contempt of court and liable to be punished accordingly, either by fine or imprisonment [section 288(4)].
In practice, where a bankrupt has failed to comply the official receiver should consider an application to suspend the running of the discharge period (see chapter 19).
18.40 Interim receivership
Where an interim receiver is appointed, there is no provision for a statement of affairs to be lodged. The debtor is required to give a full inventory of all property and provide information required to enable the interim receiver to carry out their functions [section 286(5)].
18.41 Removal of the process of debtor’s petition and statement of affairs
On 6 April 2016 the process for the court to make a bankruptcy order on the debtor’s own petition was removed from the legislation and the Office of the Adjudicator was created with the power to make a bankruptcy order on an application by the debtor. Instead of completing a petition to the court and statement of affairs; a debtor completes an online application form which is submitted to the Adjudicator for review and, if appropriate, an order will be made. The Adjudicator will create an Electronic Bankruptcy Folder (‘EBF’) which replaces the court file. This sits separately to ISCIS and documents that relate to the Order are stored on the EBF.
The court will still make bankruptcy order on a petition presented:-
- by the individual partners under the Insolvency Partnerships Order 1994 (see chapter 52), sometimes known as a “Form 16 petition”;
- by the personal representative of the deceased under the Administration of the Insolvent Estates of Deceased Persons Order 1986 (see chapter 56).
Both of the above are referred to later in this chapter
The debtor presenting their own petition was required to submit a statement of affairs to establish that they were unable to pay their debts. The application submitted to the Adjudicators Office now serves that purpose and does not involve the official receiver.
18.42 Further information
The official receiver may ask a nominated person (see paragraph 18.3) or a bankrupt to submit further written information explaining any matter contained in the preliminary information questionnaire or any statement of affairs submitted and may require that information to be verified by a statement of truth [rule 7.47(2); rule 10.61(2); rule 10.65(2)]
The ability to request further information or accounts is independent from any request to submit a statement of affairs.
18.43 Accounts
The official receiver can also require accounts to be filed for a company, partnership or the bankrupt, to cover a period up to the date of the order. The period of the accounts may begin from any date up to three years before the presentation of the petition [rules 7.46 or 10.60] or bankruptcy application [rule 10.63]. In a company winding-up the official receiver can extend this period back to the date of the last audited accounts. If the official receiver requires accounts in respect of any other period application must be made to the court.
18.44 Type of accounts
The official receiver can require the submission of accounts of any description:-
- deficiency accounts,
- full trading and profit and loss accounts,
- receipts and payments or goods accounts-this includes a letter, guidance notes and statement of truth for use where the official receiver requires the bankrupt or company officer to provide more detailed information regarding receipts and payments, or goods purchased and sold).
The amount of information required is entirely at the discretion of the official receiver; although the requirement should be reasonable and should be obtained in order to materially assist the official receiver’s enquiries.
18.45 Deficiency accounts
In every case the official receiver should obtain a numeric explanation of the insolvent’s deficiency. In most cases the official receiver does not need to consider obtaining a separate deficiency account, as there will be adequate information in the preliminary information questionnaire (PIQB/PIQC) or statement of affairs. In cases where a further explanation is required, the official receiver can consider obtaining a deficiency account which forms part of the statement of affairs. It would be more appropriate if the complete document was submitted rather than obtaining a deficiency account to support the information in the preliminary information questionnaire, since it is the deficiency on the statement of affairs which should be accounted for. The company officer, partner or the bankrupt should be provided with the relevant form and accompanying guidance notes.
18.46 Full trading and profit and loss accounts
In any case where the insolvent was carrying on business, the official receiver can require the submission of accounts to cover the period up to the date of the insolvency order and commencing from a date up to three years prior to the presentation of the petition [rule 10.60(2)] or application [rule 10.63(2)] or in the case of companies from the date of the last audited accounts (which may be an earlier date)[ rule 7.46(2)]. The official receiver can require these accounts to be verified by a statement of truth [rules 7.46(5); 10.60(5); 10.63(3)].
Assistance may be required in preparing such accounts, (see paragraphs 18.52 to 18.55).
18.47 Receipts and payments account
The information obtained in the preliminary information questionnaire may disclose that further details of monies received and payments made for a particular period of time or trading are required. The official receiver may request that a receipts and payments account is submitted for a period of time ending with the date of the insolvency order.
Assistance may be required in preparing such accounts, (see paragraphs 18.52 to 18.55).
18.48 Goods accounts
The official receiver may request the submission of a goods account which will show the amount of goods in hand or under the insolvent’s control at a certain date and then the details of all goods purchased and sold between that date and the date of the insolvency order.
18.49 Use as evidence
Any account or piece of information supplied as described above which is likely to be used for evidential purposes, should be verified by a statement of truth. The fact that a document is to be verified in this way, might also focus attention on the need for reasonable accuracy in its preparation by the person who is completing it.
18.50 Submission of accounts
The official receiver should request any of the above mentioned accounts must be delivered to the official receiver within 21 days of the request The same criteria should be applied to the date fixed in such cases as in relation to notice requiring a statement of affairs.
18.51 Failure to comply
In a winding up a person who fails to submit accounts, or to provide further information, without reasonable excuse, in support of the statement of affairs, may be guilty of an offence and liable to a fine [section 235(5)]. These matters may also be considered in relation to the person’s conduct when considering disqualification proceedings.
A bankrupt who, without reasonable excuse, fails to comply with their obligations is guilty of a contempt of court and liable to be punished accordingly [section 291(6)]. In addition the official receiver may consider that the bankrupt’s failure to comply with his obligations should be reported to the court and apply for the running of the automatic discharge period to be suspended.
18.52 Expenses allowance
Exceptionally, the official receiver may authorise an allowance, payable out of the company or bankruptcy estate, towards expenses to be incurred in employing an accountant or other person to assist in preparing a statement of affairs or accounts required in the proceedings [rules 7.45; 7.46(4); 10.59; 10.60(4); 10.64(2)]. This course of action should only be considered on receipt of a written application from the person who has been required to supply the information.
The majority of company officers, partners or the bankrupt should be able to complete the statement of affairs forms, using the accompanying guidance notes, without the need for professional assistance. The official receiver should only authorise an allowance when the person concerned offers a reasonable explanation why they are unable to prepare for themselves, a proper statement of affairs or accounts. Any allowance made is dependent upon the availability of funds in the estate and where funds are not available the official receiver may need authority to incur or increase a debit balance.
18.53 Criteria Estimate
An allowance towards expenses should only be authorised if the official receiver considers that the person concerned cannot prepare them and that the benefit to be received by the production of such accounts will warrant the cost to the estate. The application for assistance must be accompanied by an estimate of the costs involved, with particulars of the individual or firm whose employment is to be specifically approved by the official receiver.
18.54 Employment by official receiver
The official receiver may decide it is necessary to employ an accountant or other person to assist in preparing a statement of affairs or accounts, but should only do so if the official receiver is not satisfied with the individual or firm put forward for this purpose by the nominated person or the bankrupt, or is concerned as to the safety of any records which may have to be released to the firm. The official receiver needs to be aware that such action would make them personally liable for the costs if there were insufficient funds in the estate to make payment in accordance with the due order of priority [rules 7.108; 10.149]. Where funds are not available the official receiver may need authority to incur or increase a debit balance.
18.55 Cost and usefulness
In considering whether accounts should be required the official receiver should have regard to the probable high cost of their preparation, the ultimate use to which they may be put (e.g. prosecution, tax recoveries, etc.) and the state of the company’s or bankrupt’s accounting records from which any such accounts are to be drawn which may increase the cost of obtaining the information.
18.56 Recording allowance
If an allowance is authorised by the official receiver this should be noted on the case management system. If an insolvency practitioner is ultimately appointed as liquidator or trustee this information must be included in the record book on hand over.
The official receiver should send written notification of an authorised allowance to the person required to submit the statement of affairs or accounts. The notification should specifically name the individual or firm approved by the official receiver, the specific manner in which they are to act in relation to the relevant records and the fee agreed for their services (stated as inclusive or exclusive of VAT).
18.57 Responsibility of person making the statement of affairs
At all times it remains the responsibility of the nominated person or the bankrupt to submit the statement of affairs or accounts and to complete the statement of truth [rule 7.45(5); 10.59(5); 10.64(5)].
18.58 Access to records
The official receiver may lay down conditions as to the manner in which access to records may be obtained by the parties involved. If the official receiver is concerned, for example, about the safety of records which may be needed as evidence in criminal proceedings, the official receiver may insist that any work on the records is undertaken at the official receiver’s office [rules 7.45(4); 10.59(4); 10.64(4)]. Basic information held about assets and liabilities should normally be made available on request to any person employed to assist, unless such information is privileged or has been provided to the official receiver in confidence.
18.59 Petition presented by the debtor’s personal representative
A petition presented under the Administration of Insolvent Estates of Deceased Persons Order 1986 ( “AIEDPO86”) by the debtor’s personal representative will be accompanied by a statement of affairs [AIEDPO86, schedule 1, paragraph 1A].
18.60 Debtor deceased prior to presentation of bankruptcy petition
The details contained in this chapter relating to a creditor’s petition statement of affairs, should also be applied generally to a case where an insolvency administration order is made against a deceased debtor. There will be certain fundamental modifications necessary in applying the requirements to the estate of a deceased person.
18.61 Submission
The AIEDPO86 allows the official receiver to require the deceased debtor’s personal representative, or, if there is no such representative, a person named by the court on the application of the official receiver, to submit a statement of the deceased debtor’s affairs [article 3; schedule 1, paragraph 15(1); article 5; schedule 2, paragraph 1(1)]
18.62 Content of statement of affairs
The statement of affairs should show the position of the estate at both the date of death and the date of the order. Supporting schedules, such as accounts or a deficiency account may also be required by the official receiver. The statement should include details of disposals of assets, and a receipts and payments account for the period between the date of death and the date of the order.
18.63 Notice
The official receiver should send notice to the personal representative of the deceased insolvent requiring that the statement of affairs be completed, verified by a statement of truth and submitted to the official receiver, with a copy, within 56 days from the date of the official receiver’s request (unless the official receiver or the court decides to extend the period for submission) [AIEDPO86, article 3; schedule 1, part 11, paragraph 15(2)].
18.64 Insolvent partnerships
The law relating to the winding up of insolvent partnerships is contained in the Insolvent Partnerships Order 1994 (“IPO”). For information on dealing with partnerships (which are not limited liability partnerships) see chapter 52.
18.65 Winding-up order against partnership only
Where proceedings are brought under article 7 of IPO against a partnership alone, the partnership is treated as being an unregistered company under Part V of the Act [IPO, article 7; schedule 3, part II, paragraph 7]. The form of statement of affairs required is that used in winding up proceedings with appropriate modifications. The partners have the same duties in relation to the submission of a statement of affairs as would normally apply to company directors.
18.66 Order against partnership and partners
Where a winding-up petition is presented by a creditor against a partnership and also a winding-up order is made against a corporate partner and/or a bankruptcy order is made against an individual partner, the partners are required to submit with the separate estate statement of affairs [IPO, article 8; schedule 4, paragraph 10].
18.67 Contents of partnership statement of affairs
The partnership estate statement of affairs should contain complete details of the assets and liabilities of the partnership with no reference being made to the separate assets or liabilities of the partners, except a note as regards assets that any surplus on a partner’s separate estate may be applied to meeting their contribution to the partnership’s deficiency.
18.68 Contents of separate estate statement of affairs
Separate estate statements of affairs need not duplicate all the information contained in the partnership statement but should contain a note that the insolvent is jointly and severally liable with the other partners for the deficiency shown in the partnership statement of affairs [Civil Liability (Contribution) Act 1978, section 3]. A copy of the relevant pages of the partnership statement of affairs (i.e. those showing the partnership assets and liabilities) should be included as an annex to the separate estate statement of affairs.
18.69 All partners present joint petition
If all the members of an insolvent partnership are individuals, they can jointly present a petition for each of them to be declared bankrupt and for the partnership business to be wound up and its property administered, without also having to apply for the partnership to be wound up as an unregistered company [IPO, article 11; schedule 7]. The members of the partnership, when presenting the petition, will also file in court a statement of affairs [IPO, article 11; schedule 7, paragraph 5].