45. Appointment of liquidators and trustees

Guidance on appointing an insolvency practitioner and handing over the estate. Including the use of the official receivers' rotas and vacancies in office.

Introduction

45.1  General

This chapter gives general advice and guidance on the appointment of insolvency practitioners as liquidators and trustees in place of the official receivers. The chapter includes the various methods of effecting their appointment and the procedures to follow once an appointment has been made. Full details of decision procedures and their operation are found in Chapter 44.

45.2  Insolvency practitioners qualifications and authority to act

Apart from the official receiver, only an individual who is authorised to act as an insolvency practitioner [section 388 and 230(3) or 292(2)] and has the necessary security bonding [section 390(3)] can be appointed as a liquidator or trustee.

It is an offence for a person who is not qualified to act as an insolvency practitioner to do so [section 389], but their actions as liquidator or trustee remain valid even if there is any defect in the individual’s appointment or qualification [section 232 or section 377].

Appointment of liquidators and trustees when a winding-up order or bankruptcy order is made

45.3  Appointment on the making of an order

On the making of a winding-up order or bankruptcy order the official receiver is appointed liquidator of the company or trustee of the bankrupt’s estate [Section 136(2) or section 291A(1)].

The court may appoint an insolvency practitioner on the making of a winding-up order or bankruptcy order but only where:

• the winding-up order immediately follows the termination of an administration or a company voluntary arrangement, or

• the bankruptcy order immediately follows the termination of an individual voluntary arrangement.

In those circumstances the court may appoint the administrator or supervisor who held office immediately before the order [section 140(1) or (2) or section 291A(2)].

Where an insolvency practitioner is appointed on the making of the order the official receiver does not become liquidator or trustee (see also paragraph 45.65).

45.4  Appointment of the responsible insolvency practitioner in a partnership

Where the insolvency order is made under the Insolvent Partnerships Order 1994 the term “responsible insolvency practitioner” refers to either the official receiver or an insolvency practitioner acting as liquidator of the partnership (or a corporate member) and/or trustee of the estate of an individual member. Where a bankruptcy order is made against all individual members on a joint petition [Insolvent Partnerships Order 1994, article 11] the responsible insolvency practitioner is trustee of the partnership. As with winding-up and bankruptcy the official receiver is appointed on the making of an order unless the Court appoints a former administrator or supervisor.

45.5  The official receiver as liquidator or trustee

The role of the liquidator or trustee is to secure, recover and realise the assets and ensure the best return for creditors. The official receiver is expected to remain in office and fulfil the role of liquidator or trustee unless either the majority of creditors resolve to replace the official receiver or the official receiver considers the case requires the skills of an insolvency practitioner.

45.6  Action on assets before handover

All steps should be taken to realise assets promptly, even in cases where there is a prospect of the appointment of an insolvency practitioner.

Where the official receiver realises assets, the proceeds of sale should be paid into the estate account and any relevant fees charged [Insolvency Proceedings (Fees) Order 2016].

Once an insolvency practitioner is appointed the official receiver will remain responsible for the security and protection of all unrealised assets until the estate is handed over to the insolvency practitioner.  The estate should be handed over as quickly as possible following the appointment of the insolvency practitioner.

45.7  Appointment following the making of an order

The official receiver may be replaced as liquidator or trustee by

• the Secretary of State on the application of the official receiver (see later guidance in this chapter)

• the creditors (and/or contributories) by a decision procedure commenced for that purpose (see later guidance and Chapter 44).

• the court (see paragraph 45.8).

45.8  Contentious issues, disputes or conflict

If there is the possibility of contention, dispute or conflict, relating to the appointment of the liquidator or trustee, a decision procedure should be commenced (see Chapter 44). This allows the creditors (and contributories) an opportunity to express their views. The outcome of the decision procedure may be appealed to the court [rule 15.33].

If the creditors and contributories resolve to appoint different insolvency practitioners to be liquidator of the company, the liquidator is the person nominated by the creditors. If the creditors have failed to appoint, or not yet appointed, the person nominated by the contributories will take office. Where there is dispute over who should hold office application can be made to the court within 7 days of the creditors resolution to determine who should be liquidator of the company [section 139(3) and (4)].

Requests for appointment by creditors

45.9  Request for the appointment of an insolvency practitioner by creditors

Creditors and/or individual insolvency practitioners acting on behalf of creditors may make a request for an insolvency practitioner’s appointment. All such requests should be dealt with in the following manner to ensure consistency.

45.10  Timing of the request

The official receiver can decline the request or give effect to the request either by application to the Secretary State or commencing a decision procedure. The decision on how to proceed will depend upon the creditor support (by value) for the nomination. 

A petitioning creditor does not constitute 100% of the known creditors where of the full extent of the creditors has yet to be established.  Where the request is made at a very early stage in the case the official receiver may not be in a position to verify

• they are the only known creditor, and

• no time has been allowed for the official receiver to establish who the general body of creditors might be.

In such cases the creditor should be advised their request will be considered within the next 14 days.

45.11  Non-surrender / no co-operation cases

There will be some cases in which the directors or bankrupt fail to co-operate and the official receiver is generally left with little creditor information. In such circumstances, particularly where information available indicates that assets are in jeopardy, the official receiver is entitled to rely on the information available at the time to seek a Secretary of State appointment for the insolvency practitioner nominated by the petitioning creditor.

45.12  Insolvent’s interests to be considered

Where the bankrupt appears to be solvent the official receiver should draw their attention to the alternatives to bankruptcy and the options for annulment. There is a standard letter available. The official receiver cannot offer advice, but the bankrupt should be encouraged to seek independent advice on their financial position. Before considering the appointment of an insolvency practitioner the debtor should be given a reasonable amount of time, but no more than 28 days from the issue of the letter, to begin the process for an individual voluntary arrangement or application for annulment before appointing the insolvency practitioner as trustee.

45.13  Request made by more than 50% of creditors (by value)

If a request comes from 50% or more of creditors (by value) who are eligible to lodge a proof of debt and participate in a decision procedure [rule 15.28], the official receiver should generally make an application to the Secretary of State to appoint the nominated insolvency practitioner without delay.

The official receiver should carefully and independently check the information provided by the creditor, or insolvency practitioner, against existing creditor information and record in the case management system notes the calculation showing that the support was over 50%.

The interests of a bankrupt whose estate will likely produce a surplus should be considered (see paragraph 45.12). Where sufficient assets have been realised or are held by a solicitor to enable the debts and costs to be paid in full the creditor should be informed of the likely date of dividend and asked if they still wish the insolvency practitioner to be appointed.

45.14  Request made by at least 25% but less than 50% of creditors (by value)

If the request is made by creditors who total at least 25% but less than 50% (by value) the official receiver should consider this request as a valid requisition to start a decision procedure (see Chapter 44).

Where the request is made by an insolvency practitioner properly authorised to act on behalf of a creditor (see paragraph 45.17), they should be asked if they wish to be provided with a list of creditors for an opportunity to refer back to the creditor who proposed the appointment to seek the support of other creditors to obtain a majority.

45.15  Request made by less than 25% of creditors (by value)

A request for an appointment by less than 25% of creditors (by value) should generally be refused.

Where the request is made by an insolvency practitioner properly authorised to act on behalf of a creditor (see paragraph 45.17), they should be asked if they wish to be provided with a list of creditors to refer back to the creditor who proposed the appointment to seek the support of other creditors.

If the official receiver considers that the case requires the skills of an insolvency practitioner the official receiver should start a decision procedure (see Chapter 44).

45.16  General authority for an insolvency practitioner to act on behalf of a creditor.

An insolvency practitioner or a firm may hold an authority to act on behalf of a creditor in all aspects of insolvencies (this is often referred to as a “blanket authority”), it is important that the scope of the authority is clear. The authority must:

• be authenticated and dated,

• clearly state the creditor’s name, address and registration details, if applicable. (Ideally the authority would be on the headed notepaper of the creditor),

• include a statement that the person authenticating the authority is authorised to give the authority,

• clearly set out the scope of the authority.

45.17  Disclosing information to insolvency practitioners - using a general authority

Insolvency practitioners are only entitled to request information on behalf of a creditor if they are properly authorised to request that information (see paragraph 45.16).  If, for example “requesting a list of creditors”, is not included in the authority, then, in the absence of further instructions from the creditor, the official receiver should decline such a request from the insolvency practitioner.

Until the official receiver is satisfied that an IP, or third-party agent, is properly authorised to act on behalf of the creditor, they must not be provided with any information relating to a case.  A nomination from a creditor for an insolvency practitioner to be appointed as liquidator or trustee, is not sufficient authority that the insolvency practitioner is acting on behalf of that creditor in its dealings with the official receiver.  No information should be given to the insolvency practitioner without proper authority from the creditor, the insolvency practitioner is then only entitled to receive the same information which would be given to a creditor. 

Where the official receiver receives a later dated authority from the creditor for another insolvency practitioner, it will be assumed that the creditor has withdrawn the earlier authority. The official receiver will be under no obligation to make enquiries.

Any general authority should be renewed after two years. The authority is a relationship between the creditor (principal) and insolvency practitioner (agent). As the official receiver is not party to the agreement the official receiver cannot cancel the agreement or deem it to have lapsed. The official receiver can express doubts that the agreement is still current and seek clarification from the creditor. In cases where the authority is over two years old, the insolvency practitioner should be encouraged to submit new authorities. In the absence of a new authority the official receiver should contact the creditor each time the insolvency practitioner attempts to rely on the old authority.

45.18  Authorities submitted to local offices

Where insolvency practitioners do not have a national agreement but wish to submit an authority to local official receiver(s), staff should request that any new authorities address the issues raised in the guidance contained in paragraph 45.16. The official receiver should in all cases send a copy of the blanket authority to the Senior Official Receiver’s Office and note the existence of the authority on their local rota.

Appointment by the Secretary of State

45.19  Power of the Secretary of State to appoint

The official receiver, as liquidator or trustee, may apply at any time to the Secretary of State for the appointment of an insolvency practitioner to replace the official receiver in office [section 137 or section 296].

The functions of the Secretary of State in dealing with applications from official receivers for the appointment of insolvency practitioners are delegated to members of the Senior Official Receiver’s Office.

45.20  Reasons for a Secretary of State appointment

The official receiver should seek an appointment by the Secretary of State where:

a) the majority of creditors (more than 50% in value of the creditors who are capable of lodging a proof of debt and voting in a decision procedure [rule 15.28]) are known to support the appointment.

b) the official receiver considers that the skills of an insolvency practitioner are required and

• the appointment is urgent, or

• the creditors have not nominated an insolvency practitioner, or

• the official receiver considers the insolvency practitioner appointed as provisional liquidator or interim trustee should continue in office, or

• the insolvency practitioner who previously held office as liquidator or trustee should be re-appointed.

The official receiver should record in the case management system notes their reasons for seeking the appointment of an insolvency practitioner.

45.21  Urgent appointments

An appointment is urgent when the official receiver decides that the matters which the official receiver cannot deal with as liquidator or trustee cannot wait a period of consultation with the creditors.  The official receiver should seek to appoint the insolvency practitioner who is next on the rota unless there is good reason to seek the appointment of a particular insolvency practitioner (see paragraphs 45.23 and 45.24).

If there is a known single majority creditor (other than HMRC) that creditor must be contacted and given an opportunity to nominate their choice of insolvency practitioner rather than accept a rota appointment. If the creditor has lodged a general (blanket) authority which specifies actions in the event the official receiver applies to the Secretary of State, then this should be followed (see paragraph 45.17).

If there is no clear majority creditor, the official receiver may apply to the Secretary of State for the appointment of an insolvency practitioner from the rota without obtaining the consent of creditors.

45.22  No creditor nomination

Where the appointment is not urgent, the creditors should always be given an opportunity to nominate an insolvency practitioner. If there are no nominations the official receiver should generally seek to appoint the insolvency practitioner who is next on the rota unless there is good reason to seek the appointment of a particular insolvency practitioner (see following paragraphs).

45.23  Connected cases

The official receiver may apply for an insolvency practitioner to be appointed who is connected to the case. This will include an insolvency practitioner who held office as provisional liquidator or interim trustee immediately before the order, or an insolvency practitioner who previously held office as liquidator or trustee. Further examples may include a liquidator of a connected company or the trustee in bankruptcy for a spouse/partner or a business partner.

In considering these appointments care should be taken to ensure

• there is no conflict of interest before the appointment is requested.

• there are no complaints from creditors which indicate they would object to the appointment.

The appointment must be made for administrative efficiency. Where the connected company, spouse or partner have different majority creditors those creditors should be asked to confirm they do not wish to nominate another insolvency practitioner.

45.24  Specialist knowledge required

Very occasionally, the next insolvency practitioner on the rota will not have the skills required to administer the estate. On these rare occasions the official receiver may seek the appointment of another insolvency practitioner with the necessary specialist skills, from the rota out of turn or otherwise. This should be explained in the application notes, with reference to the special skills held by the prospective appointee.

Official receivers should bear in mind that the insolvency practitioners Ethics Code would require them to refuse an appointment if they did not consider they had the necessary skills and resources to administer the case.

45.25  HMRC preference for rota appointment

HMRC’s preference is for a Secretary of State appointment to be made from the official receiver’s rota unless:

• specific instruction is given in the petition information, where HMRC are the petitioning creditor, or

• by notice/request to the official receiver.

In some cases where HMRC are pursuing recoveries more actively than usual or in which they have a special interest, HMRC’s interest as a creditor may be affected by a rota appointment. Where this is occurs the official receiver will be notified in the information provided by HMRC.

Where HMRC request the appointment of a particular insolvency practitioner see guidance from paragraph 45.9.

45.26  Late appointment of an IP over an interest in the family home

An appointment may be sought without consulting creditors provided the following paragraph appeared in the report to creditors:

‘The principal asset in this case is the dwelling house referred to above. At this stage it is envisaged that the bankrupt’s interest may be realised without the need for possession proceedings. However, if this is not possible action will be taken that may include the official receiver seeking the appointment as trustee of the next insolvency practitioner from their rota without further reference to creditors.’

There are likely to be two situations in which such an appointment will be necessary. The first is where the official receiver had intended to keep the case as a reasonably achievable realisation (e.g. the co-owner buying out the bankrupt’s interest) but this changes. The second is where no action with regard to the property was being taken at the time the report to creditors was issued, the case was passed to the Property Team and they assess that a trustee appointment is required.

45.27 Informing the insolvency practitioner of the case details

The information in this paragraph and paragraph 45.28 does not apply where the IP acting on behalf of creditor has contacted the official receiver seeking appointment. The information only applies where the insolvency practitioner is being asked by the official receiver whether they consent to act in a case (see paragraphs 45.16 and 45.17 for disclosure of case information where the official receiver is contacted by an insolvency practitioner for information on a case).

The official receiver should provide all the relevant information to the insolvency practitioner to enable an informed decision to be made on whether to accept the appointment. To assist official receivers in the provision of information to an insolvency practitioner, the appropriate Initial Information Sheet should be used in all cases when offering a case to an insolvency practitioner. The appropriate Initial Information Sheet should be emailed to the insolvency practitioner during or after the initial telephone call offering the case. A copy should be saved to the electronic case file.

45.28 Confirming the insolvency practitioner’s agreement to take the case

Once the relevant information has been provided, the insolvency practitioner should be asked whether they will accept the case. Where the Initial Information Sheet is sent after the insolvency practitioner has verbally accepted the case, the official receiver should ensure the insolvency practitioner is still willing to accept the case. Where the circumstances of the case change after the agreement, the Initial Information Sheet should be updated and included in the handover of documents to the appointed IP.

45.29 Official receiver should not imply the appointment a foregone conclusion

In discussing a possible Secretary of State appointment with an insolvency practitioner, the official receiver should not suggest that the appointment is a foregone conclusion. The Secretary of State may refuse the application [section 137(3) or section 296(2)].

45.30 Official receiver to check the insolvency practitioner is on the IP database

The official receiver must ensure that the proposed office holder is on the IP database.  If the insolvency practitioner is not recorded, the official receiver must ensure that the proposed office holder is authorised to act as an insolvency practitioner and request the insolvency practitioner’s details added to the database. The database is managed by Estate Accounts Services.

45.31 Consent to act

The official receiver must obtain the insolvency practitioner’s written consent to act as soon as they agree to accept the case. This will ensure an insolvency practitioner is not appointed by mistake or following a misunderstanding.

When obtaining consent to act the official receiver should confirm the full details of the case are included on the consent.  The official receiver should check that the name(s) of the correct insolvency practitioner(s) have been entered and match the information on the IP database. For joint appointments all insolvency practitioners nominated should be included on the consent to act. Separate consents to act for each nominee are acceptable.

45.32  Partnerships - general

Under the Insolvent Partnerships Order 1994, where the official receiver is appointed as the responsible insolvency practitioner on the making of the order, an insolvency practitioner may be appointed by the Secretary of State at the request of the official receiver [Insolvent Partnerships Order 1994, articles 7, 8 and 11 applying the provisions of the Insolvency Act 1986 with modifications ].

In articles 8 and 11 cases the insolvency practitioner appointed automatically becomes the responsible insolvency practitioner in relation to any other member of the partnership where a subsequent order is made under the same article [Insolvent Partnerships Order 1994, schedule 4, part II, article 13 or schedule 7, article 13].

Official receivers need to be aware of the exception in paragraph 45.33.

45.33  Partnerships – article 8 cases

In article 8 partnership cases the official receiver does not have the power to make an application to the Secretary of State to appoint an insolvency practitioner in any of the estates until an order has been made against the partnership (winding-up order) and at least one of the members (usually a bankruptcy order).

If no orders have been made against the members of the partnership within 28 days of the winding-up order against the partnership, the proceedings are treated as if a winding-up order had been made under article 7 and a Secretary of State application may then be made.

Where petitions against the individual members subsequently result in insolvency orders, the insolvency practitioner acting as liquidator of the partnership will not automatically become liquidator/trustee of the member unless the court directs at the hearing that the provisions of article 8 apply, or directions are sought to apply the provisions of article 8 to the proceedings. For further information on partnerships, see chapter 52.

45.34  Application for a Secretary of State appointment – company cases

Before making application to the Secretary of State the official receiver must check the company is not dissolved, or pending dissolution because the official receiver has filed notice with the Registrar of Companies the winding-up is complete [section 205(2)]. The official receiver must apply for restoration of the company or to defer the dissolution before making application for the appointment (see Chapter 54).

45.35 Refusal to appoint

Where the Secretary of State refuses to appoint a liquidator or trustee [section 137(3) or section 296(2)] the official receiver will be notified. Where the official receiver is aware an insolvency practitioner is expecting to be appointed, they should be informed that an appointment will not be made. Where the official receiver considers specialist skills are required to administer the estate the possibility of appointing a special manager should be considered (see Chapter 41).

45.36 Effective date of appointment

The effective date of appointment will generally be the date that the Senior Official Receiver’s Office process the certificate of appointment. This will appear on the case management record and on the certificate of appointment [rule 7.57(3) or rule 10.72(3)].

45.37 Action to take regarding certificate of appointment

The official receiver should provide a copy of the certificate to the liquidator/trustee as part of the handover of the estate, or earlier in urgent cases [rule 7.57(2) or rule 10.72(2)].

45.38 Creditors requisition a meeting after the appointment of an insolvency practitioner by the Secretary of State

A requisition of a decision to replace the official receiver in office as liquidator or trustee is not valid once an insolvency practitioner is appointed [section 136(5)(c) or section 298(4)]. Instead the creditors have the ability to require the insolvency practitioner to start a decision procedure to remove the insolvency practitioner from office as liquidator or trustee [section 172(2) or section 298(1)]. The official receiver should suggest that the requisition is made to the liquidator or trustee. For further details on requisitioned decision procedures see Chapter 44.

Appointment by a decision procedure

45.39  General

Details of the conduct of decision procedures can be found in Chapter 44. The official receiver will start a decision procedure for the sole purpose of being removed from office as liquidator or trustee and replaced by an insolvency practitioner [section 136(4) or section 298(4)]. Creditors and insolvency practitioners who wish to requisition a decision procedure might be reminded that the process may be easier if they can secure the support of a majority of creditors and enable the official receiver to request an appointment by the Secretary of State.

45.40  Choice of liquidator – company cases only

The creditors and contributories may nominate different people to be liquidator. The creditors’ nominee takes precedence over any nomination made by the contributories. If the creditors have not passed a resolution for an appointment but the contributories have, the appointment made at the contributories’ meeting will take effect [section139(3)].

If the creditors and contributories nominated different practitioners, either a creditor or a contributory may, within 7 days of the creditors’ decision, apply to the court for the appointment of the contributories’ nominee to be liquidator instead of or jointly with the creditors’ nominee, or for another practitioner to be appointed in place of the creditors’ nominee [section139(4)]. The convener of the decision procedure should certify any appointment, notwithstanding that an application may be made to the court [rule 7.53]. Immediately after the official receiver knows the outcome of any hearing the official receiver should notify any liquidator whose appointment is effectively terminated by the making of the court order [rule 7.56].

45.41 Effective date of appointment

Where a decision procedure has resolved to appoint a liquidator or trustee, the liquidator’s or trustee’s appointment is effective from the date on which the convener certifies the appointment and that date must be endorsed on the certificate [rule 7.53(5) or section 10.68(3)].

45.42 Consent to act and certification

An appointment of a liquidator or trustee should only be certified when the insolvency practitioner has provided a written consent to act [rule 7.53(5) or section 10.68(3)]. Paragraphs 47.27 and 47.28 should be followed if the insolvency practitioner requires further information before providing consent to act.

When obtaining consent to act the official receiver should confirm the full details of the case are included on the consent.  The official receiver should check that the name(s) of the correct insolvency practitioner(s) have been entered and match the information on the IP database. For joint appointments all insolvency practitioners nominated should be included on the consent to act. Separate consents to act for each nominee are acceptable.

The official receiver should provide a copy of the certificate to the liquidator/trustee as part of the handover of the estate, or earlier in urgent cases [Rule 7.53(7) or rule 10.68(8)].

45.43 No appointment

If the decision procedure does not result in the appointment of a replacement liquidator or trustee, the official receiver must decide whether to seek an appointment by the Secretary of State [section 137(2) or rule 10.67].

45.44  Appointment, resignation and removal of insolvency practitioners as liquidator or trustee

An insolvency practitioner may resign or be removed as liquidator or trustee [section 172 or section 298]. The official receiver will fill any vacancy which arises upon the insolvency practitioner vacating office [section 136(3) or section 300].

If the insolvency practitioner intends to resign, creditors must be invited by a decision procedure or deemed consent to consider whether a replacement should be appointed unless the resignation simply reduces the number of joint appointees [rule 7.61 or rule 10.77]. A resigning liquidator who will not be replaced in office must give the official receiver notice of their intention to resign and details of outstanding matters to be dealt with in the liquidation [rule 7.62]. A resigning trustee must give notice of the decision procedure to the official receiver [rule 10.77(7)]. The resignation is effective 21 days after the insolvency practitioner files notice of their resignation with the court or, in a bankruptcy based upon a debtor’s application, delivers notice to the official receiver [rule 7.61(7) or rule 10.77(8)].

If there has been a resolution for the removal of the liquidator or trustee, the convener of the decision procedure must, within three days, deliver a certificate of removal to the official receiver [rule 7.63 or rule 10.78]. The official receiver must file the certificate of removal in court (in a winding-up or bankruptcy based on a petition to court) as soon as reasonably practical. A copy of the certificate must be sent to the removed liquidator / trustee and, in a winding-up, notice of removal sent to Companies House [rule 7.64 or rule 10.79].

The removal of the liquidator or trustee is effective from the date of the certificate of removal [rule 7.63(5) or rule 10.78(4)].

If the creditors appoint a new liquidator or trustee, the convener will also send the certificate of appointment to the official receiver rule 7.63(3) or rule 10.78]. The appointment is effective from the date on which the convener certifies the appointment and that date must be endorsed on the certificate [rule 7.53(5) or section 10.68(3)]. The official receiver must deliver a copy of the certificate of appointment to the new liquidator or trustee [rule 7.53(5) or section 10.68(8)].

Vacancies in office

45.45 Official receiver the liquidator or trustee in a vacancy

The official receiver will become liquidator or trustee in the event of any vacancy in office (e.g. after an insolvency practitioner’s release or death) [section 136(4) or section 300(2)]. A vacancy includes cases where it is necessary to revive the trusteeship of a bankrupt’s estate after the trustee has been released [section 299 release of trustee].

If the official receiver considers the case requires the skills of an insolvency practitioner, the official receiver should take immediate steps to secure the appointment, normally by applying to the Secretary of State. Where an insolvency practitioner has died or resigned for health reasons, it will often be convenient for another partner in the firm to be appointed to secure continuity and minimise expense.

45.46 Referral to Secretary of State (bankruptcy cases only)

The official receiver must, at the end of 28 days beginning with the date on which the vacancy first came to the official receiver’s attention, refer the need for an appointment to the Secretary of State, unless the official receiver has decided, or has been required, to ask the creditors to appoint a trustee by a decision procedure [section 300(3),(3A),(4)].

It is not practical for the official receiver to make this referral where the official receiver will remain as trustee. Failure to refer the need for an appointment to the Secretary of State will not undermine the official receiver’s ability to deal with an asset or invalidate any of the official receiver’s actions as trustee. If, at a later, date the official receiver finds that their appointment is appropriate, the official receiver may apply to the Secretary of State in the usual way [section 296].

Handovers

45.47 Immediate handover

It is important to handover the case on or shortly after the effective date of appointment (see paragraphs 45.36 and 45.41). In any event, the case must be offered for handover within eight working days following the date of appointment. From the date of appointment, not handover, the insolvency practitioner has a personal responsibility for the assets. The insolvency practitioner must notify their insurers of the appointment, assets, and other details within 15 days of the end of the month in which the appointment took place. Retrospective bonding is prohibited and the insolvency practitioner can face financial and other penalties because of delayed handovers. If it appears likely in advance of a decision date that an insolvency practitioner will be appointed, there is no reason why all the papers cannot be prepared for handing over to the insolvency practitioner immediately the appointment is certified.

45.48 Handover by post

Handovers may be effected by post. The insolvency practitioner must acknowledge receipt of articles handed over by returning the handover list, liquidator/trustee’s undertaking and any other specific receipt duly signed.

45.49 Handover after the official receiver has given notice the administration is complete.

If a case is being handed over to a liquidator after the official receiver has given notice to the Registrar of Companies the winding-up is complete [section 205(1)], the record book must contain a note of the date on which the notice was sent. The notes in the record book must confirm whether the official receiver has made any application to defer the dissolution of the company.

If the official receiver has not made application to defer the dissolution, the Secretary of State may, on application of any other person who appears to be interested, make an order deferring the dissolution [section 205(3)].

45.50 Collection agents

Where collection agents have been appointed the appointment of the agents should be drawn to the attention of the insolvency practitioner in the record book. The official receiver should inform all agents instructed, that an insolvency practitioner has been appointed as liquidator or trustee. The official receiver will be responsible for pre-appointment charges if the insolvency practitioner has insufficient funds to pay these costs. A copy of this correspondence should be given to the insolvency practitioner.

The collection agent will then seek to renegotiate their employment with the insolvency practitioner.

Where any agents have been instructed through a conditional fee arrangement the following wording should be used or adapted in the record book,

‘[name of agent] have been appointed under a conditional fee arrangement to pursue [details of asset].  The costs of engagement on behalf of the liquidator / trustee falls within rule 7.108(4)(a)(ii) / rule 10.149(a)(i) of the Insolvency (England and Wales) Rules 2016 as an expense of the estate.  If the arrangement is terminated, their fees immediately become payable by the liquidator / trustee from the estate, plus a success fee if the claim is subsequently won.’

45.51 Official receiver’s duty of care

The official receiver owes the insolvency practitioner a common law duty of care when providing information and the official receiver should take care to supply proper, complete and accurate information about the insolvent’s estate. In particular the official receiver should ensure that information which is not readily apparent from the documents being supplied - for example, details of telephone conversations or meetings the subject of which affects the estate - is provided.

This advice should be applied from the first time any approach to an insolvency practitioner to take a case is made. If this is not done, and the insolvency practitioner can show that the official receiver has been negligent causing loss to the insolvency practitioner, an action may lie against the official receiver for damages for breach of that common law duty of care.

It is also important that the information provided assists the insolvency practitioner in obtaining specific penalty cover for the correct amount [Insolvency Practitioners Regulations 2005, schedule 2 paragraph 4]. The amount of the specific penalty equals the value of the insolvent’s unsecured assets at the date of appointment.

45.52 Duty of care – Initial Information Sheet

To assist the official receiver in the provision of information to the insolvency practitioner the Initial Information Sheet should be completed in all cases.

The form should be updated if there are any changes between the case being offered to the insolvency practitioner and the handover taking place. When the case is handed over to an insolvency practitioner a final version of the document should be included in the handover. A copy should be saved to the electronic case file.

45.53 Fees and expenses

The insolvency practitioner should be notified of any known or probable expenses, relating to the security or realisation of assets, which remain outstanding at the date of the handover.

Any invoices received after handover, e.g. relating to the payment of insurance premiums due, will be charged to the estate and the debit balance transferred to the insolvency practitioner.

Further information on fees, expenses and the estate account can be found in Chapter 48.

45.54 Handover of books and records

The insolvency practitioner is entitled to receive from the official receiver all the insolvent’s books, papers and other records. Only in exceptional cases should the official receiver consider retaining any of these, e.g. because of a pending prosecution or disqualification.

Where proceedings are pending, the official receiver should have regard to Chapter 16. If books and records are handed over it is essential that the insolvency practitioner is made aware of the requirement to preserve the documents. The official receiver will be able to recover records and documents from the insolvency practitioner if they are required at a later date.

Where the books, records and papers are retained, the practitioner should be invited to attend at the official receiver’s office to inspect the records as required. Any relevant documentation may be copied on request.

For guidance on ensuring all books and records are handed over in a timely and cost efficient manner, see Chapter 16.

45.55 Items that should not be included in the handover

The official receiver is required  to provide the insolvency practitioner with all information held which is reasonably required by the insolvency practitioner to effectively discharge their duties as liquidator or trustee [rule 7.60(7) or 10.75(7)]. This is primarily documents relating to the assets and liabilities. It does not include information relating to the official receiver’s investigations (unless they relate to the recovery of assets) or complaints received by or about the official receiver’s administration.

Where any document (for example, a narrative statement or a letter from a director or bankrupt) contains information that should be disclosed but also information that should not be disclosed, the official receiver should extract the disclosable information into a separate document or letter to include in the handover or redact the original document to hide the ‘un-disclosable’ elements.

Statements made voluntarily by third parties where the third-party may be identified from the statement should not be disclosed without the written consent of the third party. Typically, this will be letters or statements providing information to the official receiver, for example, about un-disclosed assets. Any request for consent should be specific to the party to whom the information is to be disclosed and the purpose.

45.56 Handover of PIQs and narrative statements

The insolvency practitioner should normally be provided with copies of the preliminary information questionnaires (PIQs) and narrative statements, particularly those taken in the early stages of the case, which contain information on potential asset recoveries. Care should be taken to redact any ‘un-disclosable’ information (see paragraph 45.55).

It is important to obtain the specific consent of the director or bankrupt to disclose the PIQ and/or narrative statement.  The PIQs contain a statement below the signature box which acknowledges that if an insolvency practitioner is appointed as liquidator/trustee in place of the official receiver, the liquidator/trustee will have separate powers to require information. A copy of the booklet will be given to the insolvency practitioner. A note in similar terms with positive consent to disclosure should be included in any narrative statement taken which contains information which would assist the liquidator or trustee.

45.57 Formal request for statements not handed over

The insolvency practitioner may formally request copies of PIQs or statements not handed over or serve a witness summons on the official receiver. The official receiver should give due consideration to the contents of the document and the guidance in Chapter 22.

45.58 Handover of information received from the Serious Fraud Office (SFO)

The official receiver can disclose information provided by the SFO, to an insolvency practitioner appointed as liquidator or trustee [Morris v Director of the Serious Fraud Office [1993] Ch 372]. If the official receiver thinks disclosure would be appropriate or is requested to disclose, the official receiver should first consult the SFO. If the SFO objects to disclosure, then the official receiver should consider making an application to the court for directions [rule 13.3].

45.59 Handover of information received from criminal investigators

Information obtained by criminal investigators or associated parties, e.g. the Police or Crown Prosecution Service should not be disclosed to an insolvency practitioner. Material seized in the course of a criminal investigation should only be disclosed under a court order [Marcel v Commissioner of the Police of the Metropolis [1992] Ch 225]. The insolvency practitioner may apply for disclosure on that basis if appropriate.

By contrast, material obtained by other means during a criminal investigation, for example a witness statement, can be disclosed if the witness consents. Any request should be referred to the relevant criminal investigator.

45.60 Items for handover

The following items should be included in the hand-over of the estate:

• Initial Information Sheet, updated as required (see paragraph 45.27).

• Certificate of appointment, if not already sent.

• Record book.

• Liquidator or trustee’s undertaking.

• All proofs of debt received (the insolvency practitioner or their representative should be asked to sign a specific receipt for these).

• Copies of the petition to the court, the winding-up or bankruptcy order and notice of any amendment to the bankruptcy description.

• Copies of any PIQ(s) and narrative statement(s) where the official receiver considers that that information is reasonably required by the liquidator or trustee.

• Copies of any statement of affairs or the relevant pages from the PIQ or bankruptcy application which detail assets and liabilities (unless disclosed in full).

• Official receiver’s report to creditors;

• Copies of correspondence which relates to the administration of the estate, for example, in relation to the employment of agents or solicitors, assets, bank accounts. See paragraph 45.55 regarding disclosure of information provided by identifiable third parties.

• Details and all relevant paperwork of claims under the Employment Rights Act 1996.

• Trading records and other books and papers of the company or bankrupt.  A detailed schedule of these records must be prepared by the official receiver and signed by or on behalf of the insolvency practitioner. If the records are subject to a lien, the existence of the lien should be drawn to the attention of the insolvency practitioner. The official receiver may retain the insolvent’s records where an investigation is in progress or where there is a prosecution, disqualification or bankruptcy restriction hearing pending.

• Any assets or items physically held by the official receiver and items or documents relating to assets (e.g. keys, leases, bank or building society pass books, vehicle registration documents, etc).

• Details of any insurance policies held by the official receiver and confirmation that they will be cancelled within 5 working days of the handover.

45.61 Receipt

In addition to any specific receipts obtained for any item, a general list of all documents handed over must be prepared. Documents should be put in the order of this list when handing over.  The insolvency practitioner will check the documents against the list and sign and return the second page to confirm receipt.

45.62  Items received after handover

If after the handover, the official receiver becomes aware of additional information, which is relevant to the insolvency practitioner’s duties as liquidator or trustee, the official receiver should pass these to the insolvency practitioner as soon as possible.

45.63 Notification to directors/partners/bankrupt of the appointment 

Where a liquidator or trustee is appointed, the official receiver should inform the directors, partners or bankrupt of the appointment. Notice should also be given to the former bankrupt in cases which are reopened and where appointments are made after discharge.

45.64 Court appointment

Where there has been a direct appointment by the court, the official receiver should ask the insolvency practitioner what records have been recovered, so the official receiver can decide whether there is a need to inspect them [section 143(2) or section 305(3)]. In these cases there will be no handover of the estate and no undertaking from the insolvency practitioner to discharge the official receiver’s debit balance. Any current or future debit balance on the account will still have to be discharged by the insolvency practitioner out of any realisations; the official receiver should remind the insolvency practitioner of this by letter and preferably obtain a signed form of undertaking.

The official receiver’s rotas

45.65 General

The official receivers maintain rotas of qualifying and willing local insolvency practitioners for use in selecting an insolvency practitioner to be appointed liquidator or trustee where there is no nomination from the creditors.

The rules relating to the operation of rotas are set by the Senior Official Receiver.

45.66 Purpose of the rota

The use of a rota ensures a fair distribution of cases for which the official receiver decides there is a need for a Secretary of State appointment and there is no majority creditor nomination. Additionally, the use of a rota ensures that in making those appointments the director(s), bankrupt or creditors are not inconvenienced by the location of the insolvency practitioner.

45.67 Geographical extent of rotas

The official receiver should operate at least one rota for each office location within their command, and the rota should be drawn up with reference to the County Court hearing centres with bankruptcy jurisdiction for which the official receiver has responsibility.

45.68 One entry on the rota per firm

The rota will contain all local insolvency practitioner firms willing and qualified for inclusion, but the firm will appear only once on the rota regardless of the number of qualified insolvency practitioners employed by the firm at the relevant location(s).

45.69 Use of the rota

In all cases (debtor, creditor, and company) the appropriate rota will be determined by the County Court hearing centre, with bankruptcy jurisdiction, which is nearest to the principal address of the case. This will be the trading address (for company and bankruptcy, if applicable) or residential address of the bankrupt.  The attached link can be used to determine nearest Court hearing centre with bankruptcy jurisdiction.  Find a Court or Tribunal

45.70 Certification for inclusion in the rota

Inclusion on the rota is regulated by a system of self-certification. A named insolvency practitioner in each firm has responsibility for the certification that the relevant insolvency practitioners in that firm are duly authorised and qualified to act and that the firm meets the criteria for inclusion on the rota. 

Universal re-certification is carried out on a two year cycle.

45.71 Criteria for inclusion on a rota

The criteria which must apply before a firm can be included in the rota are:

• The firm must have a genuine local presence (see paragraph 45.72).
• The firm’s local (rota) office must be permanently staffed (see paragraph 45.73).
• The insolvency practitioner with conduct of the case must exercise supervision of the day to day casework and be available for meetings at the firm’s local (rota) office during normal office hours.
• Where the day to day administration of the case is not carried out at the firm’s local (rota) office, staff at that office must have access to files and be able to respond to all enquiries within a reasonable amount of time.

45.72 Evidence of a local presence

For an insolvency practitioner to have a local presence, the firm’s office must occupy and operate from an office. For the purpose of rota inclusion office locations will be linked to a County Court hearing centre with bankruptcy jurisdiction. Firms will be assigned to a rota(s) on the basis of the nearest County Court bankruptcy hearing centre to their office location(s).    A PO Box address (or similar) is not sufficient to demonstrate evidence of a local presence. Official Receivers may require information or documents from an insolvency practitioner as evidence of local presence.

45.73 Permanent staffing of the local office

For an office to be considered permanently staffed it must be staffed during normal office hours by either the insolvency practitioner personally or by at least one directly employed member of staff who is experienced in insolvency matters. It is not sufficient for there to be an agency or retainer relationship with the employee at the location. It is recognised that hybrid working may mean that the office may not be permanently staffed during normal office hours every working day but there should be a permanent presence.

45.74 Enquiries and inspections to ensure compliance

Official receivers may make enquiries and carry out periodic visits to the premises of local (rota) offices to ensure compliance with the criteria. The decision to make such a visit, and the scope of the related enquiries, will be at the discretion of the official receiver, seeking guidance from the Senior Official Receiver, as appropriate.  

45.75 Sanction where firm found to be operating outside criteria

Where, perhaps following an inspection, the IP firm is found to be operating outside the required criteria, the official receiver should give the firm one month to remedy the defect(s) and, if not remedied, that firm should be removed from the rota.

The official receiver should write to the firm to inform them of the removal, setting out the reasons.

If appropriate, and subject to any representations from the firm, the responsible insolvency practitioner(s) may be reported to their recognised professional body. This will be appropriate, in particular, if the official receiver is of the opinion that the firm has provided deliberately misleading information in an attempt (successful or otherwise) to be placed on the rota. The decision to report an insolvency practitioner in these circumstances is at the discretion of the official receiver, but the Senior Official Receiver should be provided with a copy of the complaint.

45.76 Practical operation of the rota

The rota should sequentially list all qualified firms, including contact details.

The rota should be used to record details of the cases offered, accepted and not accepted by a firm. Where appropriate, any special circumstances regarding the case or the reason for non-acceptance  should be noted against the relevant entry.

In general, the next firm on the list should be offered the case. If that firm turns down the case, it should be offered to the next firm on the rota, and so on. Where a firm turns down a case in circumstances where another firm subsequently accepts the case, they will not be offered another case until the rota returns to that firm. The firm would not lose their slot if the case is turned down for a valid reason such as a conflict of interest.

45.77 Periodic audits of the operation of the rota

Official receivers should undertake periodic reviews of the IP rota to ensure compliance with the standard operational policies.

45.78 Transparency relating to the rota

To ensure that all matters relating to the operation of the rotas are open and transparent, rotas will be published on the internet, including a quarterly publication showing how cases have been offered, accepted and not accepted.

45.79 Complaints relating to the operation of the rota

Complaints relating to the operation of the rota should be addressed to the relevant official receiver in the first instance, under the standard complaints process.

45.80 Dealing with applications to be put on the rota

Where the official receiver is approached by an IP firm asking to be put on the rota outside of the normal re-certification period, they may do so but must first ensure that the Certificate of Compliance is completed and submitted (see paragraph 45.70).

45.81 Temporary removal from the rota due to restriction on IP

From time to time a Recognised Professional Body may issue a restriction order against an insolvency practitioner which will restrict them from taking any new appointments for a given period of time. Any restrictions will be included on the insolvency practitioner details on the IP Database on ISCIS. The official receiver should ensure that insolvency practitioners are not offered new appointments during the period of any restriction.

45.82 Removal due to repeated refusal to accept cases

Unreasonable and repeated declining of cases can be considered a ground for the official receiver to exclude an IP firm from the rota.