8.29 Document exchange
The document exchange (DX) service is a delivery of business to business mail for professionals in the following industry sectors: legal and judiciary, financial services, retail finance, property and construction, government, health, utilities, optical and commercial. The Service is run by Hays DX and operates via a network of local collection and delivery points known as 'exchanges'. Members post their mail into the nearest exchange and collect mail the following morning. An exchange may have a single user or a number of different users.
An inspecting officer should ascertain whether an insolvent has a DX address and obtain relevant details. If the insolvent has a DX address, he will hold a key to a lockable box in his exchange.
DX - Company
Where the insolvent is a company, the official receiver should take possession of the key to the lockable box and ensure the box is emptied of mail. Arrangements should be made as soon as possible for the insolvent company's DX box to be closed and the DX service cancelled. A request should also be made for any post sent to be redirected to the official receiver via the DX system. Hays DX will redirect post free of charge for one month. The official receiver should make any such request in writing to Hays DX enclosing a copy of the winding up order. The address is provided at annex 1.
DX - Bankruptcy
In a bankruptcy case arrangements should be made for the DX service to be terminated immediately. A request should be made to Hays DX that any post sent to the insolvent's DX address should be returned to sender.
Hays DX have produced software known as 'Address Plus' which allows the official receiver to search to see if an insolvent has a DX address by typing in a postcode or company/trading name. All official receiver offices have a copy of this software.
Where the insolvent holds birds, fish or animals intended for sale, the inspecting officer should take an inventory of them and ensure that they are securely contained. If such creatures are not to be sold immediately, the official receiver should ensure that they will be fed and cared for until a sale can take place. Where necessary the official receiver may buy feeding stock and employ a manager (which may be the bankrupt or a company officer) to maintain the creatures until sale but before doing so, should consult Technical Section for advice (see also paragraph 31.6.58). If the official receiver decides that the creatures do not have a realisable value, he should contact a reputable animal or wildlife organisation, such as the Royal Society for the Prevention of Cruelty to Animals, to arrange for their disposal. A bankrupt’s pets will not usually have a realisable value but where they are valuable, the official receiver should sell them. Such a sale may be to a relative or friend of the bankrupt, provided the official receiver is satisfied that he has obtained the market value of the pet.
Reference should also be made to the following paragraphs:
Livestock - paragraph 31.6.40
Pedigree pets - paragraph 31.6.47
Vets - paragraph 59.61.
If any animal appears likely to be dangerous, consideration should be given to its immediate disposal with the assistance of the appropriate organisation. Under the Animals Act 1971, the keeper of an animal will be strictly liable for any damage caused by that animal if the animal belongs to a dangerous species (i.e. one not usually found domesticated in Britain) and also, in certain circumstances, for damage caused by an animal which is not of a dangerous species. A keeper is the person who owns or is in possession of the animal. The official receiver will, as trustee, own the insolvent’s animals, and could as receiver and manager or liquidator be considered to be in possession of such animals.
Section 8 of the Food Safety Act 1990 provides that a person who sells or offers for human consumption any food which fails to comply with food safety requirements shall be guilty of an offence. Numerous regulations regarding food safety have been made under this Act. The inspecting officer should under no circumstances consider the sale of perishable food e.g. meat, milk, sandwiches, fruit and vegetables. The inspecting officer should arrange for the disposal of the food with the assistance of the local authority if necessary. Any frozen food should also be disposed of in the same manner as the official receiver is unable to verify its storage history. Further information may be found at paragraph 31.6.38 - fresh food, 31.6.39 - grocery items and 31.6.41 - milk.
If the insolvent is owner or lessee of any motor vehicle, it should be locked and, if possible, parked off the road, preferably in a garage. If a vehicle is left on a public highway, it must be taxed and insured (refer to chapter 49 regarding insurance). In any event it should not be driven, except by the official receiver’s agents in the course of disposal. In no circumstances should a member of the official receiver's staff drive a vehicle without adequate insurance cover and the express permission of his senior officer. Such an occurrence should be a rare event e.g. where essential to safeguard the asset. Further information with regard to motor vehicles may be found at chapter 31.2 Part 3. However, if the official receiver is satisfied that a bankrupt needs a vehicle for use in his current employment, business or vocation, he should be permitted to retain it as exempt property (see Part 8 of this chapter and paragraphs 31.2.6-31.2.11).
If the inspecting officer encounters firearms or explosives during an inspection, he should not touch or move them and should immediately contact the police for advice, particularly if the circumstances are suspicious. The police will be able to confirm whether a firearm is registered and whether its owner holds other registered guns. Firearms should only be transported by the police or a licensed gun dealer and likewise explosives would only be moved under the supervision of the police or other competent authority. There are numerous regulations relating to the storage, transportation and sale of firearms and explosives and the official receiver should consider the early employment of a specialist agent. Further information on this subject can be found at paragraphs 31.6.29 - 31.6. 36.
8.35 Public houses, tied houses, free houses, wines and spirits
If the insolvent is trading as a public house, the inspecting officer should immediately verify whether the public house is a tied house and obtain a copy of any tenancy agreement. If so, the brewery should be informed of the winding up or bankruptcy order immediately. In such circumstances it is the responsibility of the brewery to either appoint a new manager or to close the premises.
If the public house is a free house, it is likely that the alcohol and soft drinks have been supplied on a sale or return basis. The inspecting officer should ascertain details of the supplier who should be notified as soon as possible. Further information on dealing with a public house are included at paragraph 59.56, 31.6 48-49 and 31.6.54.
Where the insolvent is trading as a petrol station the inspecting officer should immediately ascertain whether the petrol station is held on a tenancy agreement. If so, the landlord should be informed immediately of the winding up or bankruptcy order as it is likely to be his responsibility to either appoint a new manager or to close the premises. Where the petrol station is independently owned by the insolvent the official receiver should establish as soon as possible whether the tanks in the petrol station are full or empty. Details of the supplier should be obtained and arrangements made for the tanks to be emptied. The official receiver should be aware that the emptying of tanks is not sufficient to deal with the fire risk. The petrol station and tanks will still contain fumes. Where the official receiver is unable to return a lease or deal with the premises immediately, specialist advice should be sought as to how best to deal with the premises to eliminate any fire risk.
Where a gas bottle containing Oxy acetylene is discovered on an insolvent's premises (usually premises where welding has been carried out) immediate action should be taken to establish whether the bottle is empty or contains gas. This information is only likely to be available if the insolvent is available to provide all relevant details. Where the official receiver is unable to verify if the bottle is empty, or where the bottle still contains gas, immediate arrangements should be made to contact the supplier to have the bottle removed from the premises due to the fire risk it presents. The gas bottle should have a label fixed to it indicating the supplier.
An inspecting officer may find drugs at a variety of premises including premises of doctors, dentists, veterinary surgeons, clinics and residential homes for the elderly. Information on how to deal with drugs discovered on inspection is provided at Chapter 31.6.20 - 31.6.28.
Guidance with regard to dealing with unusual businesses and related assets may be found in chapter 59.
8.40 Dealing with waste: duty of care upon the official receiver
The official receiver is under a duty of care imposed by environmental legislation to ensure that waste is dealt with in the correct way. It is a criminal offence to keep or dispose of 'controlled waste', i.e. waste from households, commerce or industry, in a manner likely to cause pollution of the environment or harm to human health. In all cases the official receiver must take prompt action to deal with the waste. Accordingly, where an inspecting officer finds that the insolvent has created waste to which the duty of care applies, he should obtain details of its nature and location and inspect it (where it is safe to do so) to establish whether it poses any immediate threat to the environment or to human health. The inspecting officer should not put himself in a position of danger by handling any dangerous substances and in the first instance assistance should be sought from the Environment Agency or a local environmental health officer. The inspecting officer may seek advice from the local authority responsible for waste collection in a particular area as to whether a particular waste may or will be collected by the authority as part of its normal public waste collection.
Guidance on the action required by the official receiver in relation to waste can be found in chapter 82 - Environmental Legislation.
8.41 Advice on action necessary on inspection generally
Wherever an inspecting officer is in doubt or difficulty concerning any matter, he should contact his assistant official receiver or, failing that, his official receiver, by telephone to seek guidance. If they are not available the inspecting officer should, as a last resort, contact Technical Section.
8.42 Obtaining information from company officer or bankrupt
The inspection report should preferably be completed with a company officer or the bankrupt. If they are not present, the person in charge of any business premises should be requested to provide the information as far as it may be known to him. It is important that the person providing the information signs the preliminary report as an acknowledgement of the details provided. This will be evidence of the assets, together with third party property, disclosed and should help to avoid subsequent disputes.
8.43 Preparation of a narrative report
In addition to completing a preliminary report, the inspecting officer should in appropriate cases prepare a narrative report to record matters not mentioned in the preliminary report. The narrative report should contain details of premises visited, date, persons seen, nature of enquiries made, results of such enquiries, and the action taken regarding the assets, including details of any items removed from the premises. A brief note of any telephone conversations made during the inspection should similarly be made. The narrative report should be signed and dated by the inspecting officer and placed on the official receiver’s file.
8.44 Preliminary information and statement of affairs
The inspecting officer may serve the preliminary information questionnaire on the company officers or bankrupt and may exceptionally consider it appropriate for the questionnaire to be completed during the inspection. Where a statement of affairs is required, the inspection may be considered an appropriate opportunity to serve the appropriate forms on the officer(s) or bankrupt. A receipt for them should be obtained.
Notes: [s131 or 288] [Form 4.16 and 4.17 or 6.33] [form SARF]
8.45 Personal service of notice to bankrupt
If the inspection is the first occasion that a bankrupt has been seen, the inspecting officer should serve form NTB1 on the bankrupt and, if appropriate, make an appointment for the bankrupt’s attendance at the official receiver’s office. A signed copy of the form should be obtained as evidence of service.
Notes: NTB1
The inspecting officer should prepare an inventory of any stock, plant and machinery, equipment, furniture, fixtures and fittings etc belonging to the insolvent. This should usually be prepared with the company officer(s) or bankrupt to avoid later disputes concerning the assets comprising the estate. The inventory should, wherever possible, state the make, type and any serial number of large items of plant, machinery, equipment, etc. The inventory should be signed by the bankrupt/company officer present to avoid any later disputes.
8.47 Professional preparation of inventory
A professionally prepared inventory should only be obtained if an adequate inventory cannot be prepared by the inspecting officer and it is considered absolutely necessary due to the nature of the stock or quantities involved or their value. Such inventories will be expensive and are not always of any benefit. Reference should be made to chapter 32.3 regarding the employment of an agent to undertake an inventory.
8.48 Identification of third party items
The company officer(s) or bankrupt should be asked to identify all items on the premises in which third parties have any interest. The items may be subject to hire purchase or lease agreements, retention of title clauses, on loan or deposited with the insolvent for repair. The company officer(s) or bankrupt should produce all relevant documentary evidence, e.g. contracts, agreements, invoices etc. The inspecting officer should keep a record of items where documentary evidence of the name and address, together with the nature of the third party interest, is not available for removal.
8.49 Separation of third party goods from insolvent’s property
Where machinery or similar items are identified as third party property, the inspecting officer should consider attaching a label with the name and address of the claimant. When an item of equipment is subject to a hire purchase or lease agreement, the name of the owner may be displayed on a plate affixed to the machine. If a large quantity of items is shown to belong to third parties, the items should be clearly separated from the insolvent’s property and any agents subsequently instructed should be advised accordingly. Reference should be made to Part 8 of this chapter regarding subsequent action in relation to third party goods.
8.50 Ownership claim by bankrupt’s relatives or friends
If a bankrupt’s relative or friend claims any property, those items should be clearly identified in the preliminary report. The relative or friend should be informed that they may be required to make a statutory declaration of ownership and produce documentary evidence in support of their claim.
Notes: [forms ATPC]
The company officer(s), bankrupt or person in charge should be requested to produce all the trading books and records of the insolvent and other documents relating to the estate, e.g. documents of title, cheque books, bank cards and correspondence. If they are not at the premises being inspected, the inspecting officer should obtain details of their whereabouts. There are various powers of the official receivers and the courts under the Insolvency Act 1986 which can be used to ensure that the official receiver obtains such records (see paragraph 8.78). Reference should also be made to Part 1 of chapter 10 regarding custody of the insolvent’s records.
Notes: [s234(2), s311]
8.52 Computerised accounting records
Where an inspecting officer encounters computerised accounting records, immediate action should be taken to protect the data stored on computer and preserve the discs on which data is stored. Reference should be made to chapter 66 and, until that chapter is amended, Information Technology Notice IT3/96, February 1996, The Recovery of Computerised Accounting Records and Other Data.
8.53 Insolvent in possession of retailer’s credit account
If the inspecting officer becomes aware that the insolvent maintained a retailers’ account with a bank for the processing of credit or debit card transactions, details should be obtained so that the bank can be notified of the winding-up or bankruptcy order (see the Annex to chapter 4 for details of the major banks concerned). In addition, the inspecting officer should recover any retailer’s card and the metal imprinting plate from the credit card machine used when processing credit and debit card vouchers. If the insolvent used a till with a swipe mechanism for reading cards, this till should be secured by the official receiver to ensure that it can not be used further.
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