December 1995
24.1 Introduction
The official receiver becomes receiver and manager of a bankrupt’s estate on the making of a bankruptcy order or an insolvency administration order (under The Administration of Insolvent Estates of Deceased Persons Order 1986 [the DPO]). The only exceptions to this are where a trustee (including the official receiver) is appointed on the making of the bankruptcy order (see paragraphs 4.34, 4.36, 17.13, 53.35 and 53.47) or where a special manager is appointed (see paragraph 32.4) when the official receiver only becomes the receiver of the bankrupt’s estate.
Notes: [Article 3 and Sch 1 Part II para 14 DPO] [s297(2), (3), (4) and (5)] [s370][s287(1)]
24.2 Partnership; official receiver not appointed as receiver and manager
Where proceedings are brought under the provisions of articles 8, 10 and 11 of the Insolvent Partnerships Order 1994 [the IPO], a "responsible insolvency practitioner", invariably the official receiver, is appointed on the making of the insolvency orders as trustee/liquidator of the estates (see paragraphs 53.35, 53.34 and 53.47). Although the official receiver is thus not subject to the restrictions imposed by s.287, where a meeting of creditors is to be held to enable the creditors to appoint an insolvency practitioner as trustee/liquidator, the official receiver should generally observe the spirit of s.287 leaving the realisation of assets, other than those which are perishable or likely to diminish in value if not disposed of, to the insolvency practitioner once in office.
Notes: [Articles 8,10 and 11: Sch 4Part IIpara 12; Sch 7para 11 IPO] [Article 2 IPO]
24.3 Advertising, gazetting and notifying the Chief Land Registrar of bankruptcy order
The official receiver shall arrange for the making of the bankruptcy order to be gazetted and advertised (see paragraphs 5.1 and 5.15).
Further, unless the Court orders otherwise, the official receiver must send notice of the making of the bankruptcy order to the Chief Land Registrar so that it may be entered in the register of writs and orders. (For further information see paragraphs 4.8 and 50.12.)
Notes: [R6.34][R6.46] [Form LRRABO]
24.4 Function of the official receiver as receiver and manager
As the function of the office of receiver and manager is to protect the estate pending the appointment of a trustee, it is essentially that of a caretaker of the assets in the estate.
Notes: [s287(2), (3)]
24.5 Contact with bankrupt
The official receiver should urgently make contact with the bankrupt to establish what is comprised in the estate. The bankrupt has a statutory obligation to provide such official inventory of his estate and such other information as the official receiver may reasonably require and is obliged to deliver possession of the estate including books, papers and other records relating to his estate and affairs. Also, insofar as any property cannot be delivered to the official receiver, he is required to do all such things as may reasonably be required by the official receiver for the protection of that property. The bankrupt should be made aware that he is no longer able to deal with, sell or otherwise dispose of any property comprised in the estate except with the consent of the court.
Notes: [s291(4)] [s291(1)] [s291(2)] [s.284] [Form NTB1]
24.6 Carrying on business
As the function of the official receiver is to protect the bankrupt’s estate, the official receiver should not allow himself to be influenced by the bankrupt or any creditor in determining whether to carry on the bankrupt’s business. Following the making of a bankruptcy order, the business should invariably be closed if only on a temporary basis to allow an assessment to be made of the merits of continuing it. The bankrupt or the official receiver might put an appropriate sign at the business premises (see paragraph 8.43). If the official receiver concludes that he should continue the business in order to preserve the goodwill he should first ensure that he obtains a satisfactory indemnity supported by a cash deposit to cover any loss in trading which the petitioning creditor or other major creditor(s) should be approached to provide. If the official receiver proposes to carry on the business without such cover, Technical Section, HQL must be consulted first. (See chapters 2 and 62 regarding matters to be taken into consideration in continuing a business.)
24.7 Special cases need for continuation of "trading"
There will be some situations where the work of the business might need to be continued, for example where a bankruptcy order is made against a solicitor who is in practice alone. The clients of the practice will need to be dealt with and their various concerns such as property purchases or sales or divorce proceedings addressed. In this example the Solicitors Complaints Bureau will appoint a solicitor as an intervenor to take over the work of the practice. The official receiver should make early contact with the Solicitors Complaints Bureau to request an intervention in the practice.
24.8 Protection of estate/ insurance cover
Section 287 (3) provides that the official receiver shall take such steps as he thinks fit for protecting any property which may be claimed for the estate by the trustee. It goes on to state that the official receiver is not, unless directed by the Secretary of State, required to do anything which involves incurring expenditure. Headquarters’ general direction is that the official receiver should take all steps thought to be necessary to protect the estate. This would include effecting insurance cover on the bankrupt’s home, stock or other assets if they are not the subject of a current insurance policy. In cases of doubt, for example where an insurance premium is likely to be unusually high, the official receiver should contact Technical Section to discuss the issues. Sight should be requested of all current insurance policies held by the bankrupt. Where documents are not available, the insurers should be contacted to ensure that adequate cover exists. (See chapter 49 generally regarding insurance.)
Notes: [s287(3)(a)] [s287(3)(b)]
24.9 Waste; duty of care
The official whilst receiver and manager is under a duty of care, in respect of any "controlled waste" which the insolvent has in his possession, to take all reasonable measures:
to prevent any other person from dealing with controlled waste without a licence or in contravention of a licence;
to prevent the escape of the waste in his control or that of any other person; and
on the transfer of waste, to ensure it is transferred only to an authorised person, together with a written description of the waste sufficient to enable other persons to avoid contravention of section 33 of the Environmental Protection Act 1990.
For further information regarding dealing with "controlled waste" see paragraphs 8.26, 8.27 and 8.28 ("controlled waste" is defined in paragraph 8.26) and chapter 82.
Notes: [s.34 Environmental Protection Act 1990]
24.10 Public liability cover
Public liability cover should be effected, if none exists, in all instances where the public may be at risk through access to or contact with the bankrupt’s premises. The effecting of cover protects the estate from claims for personal injury (see chapter 49).
24.11 Notices to banks/building societies,
These notices should be issued as soon as possible. The official receiver should obtain confirmation of the amount in the bankrupt’s account/owed to the bankrupt; the surrender value of the policy/ies and that these amounts will be held to the official receiver’s order pending the appointment of the trustee. If the official receiver considers the funds held to be "at risk", he should realise them without delay. Funds might be at risk, for example, where a spouse continues to hold a cheque guarantee card on the bankrupt’s account, or in all cases of cheques and other remittances payable to the bankrupt, or where a policy document has gone astray. (See paragraph 4.16 notices to be sent out on making of bankruptcy order.)
Notes: book debtors and life assurance companies [Forms NTASS and BANK1]
24.12 Contact not established with bankrupt, whereabouts unknown
When a bankrupt fails to attend for two appointments and no contact is received from him or on his behalf, enquiries should be made to establish whether he is still at the bankruptcy order address. The petitioning creditor’s solicitor may be advised that contact has not been established with the bankrupt and asked to provide any other known address(es) and details of how the petition was served, especially if there were unusual circumstances. An inspection should be carried out in non-surrender cases (see paragraph 8.4). It is possible that the bankrupt may still be at the address or that a new occupier or neighbour may be able to provide an address for him. A re-direction order on the bankrupt’s post should be considered where the bankrupt fails to surrender to the proceedings (see paragraph 4.23).
24.13 Enforcement proceedings
Ultimately, if the bankrupt’s whereabouts cannot be traced the official receiver should apply to the court for the bankrupt’s public examination, the advertisement of which may come to his attention. If he does not attend the court should be asked to adjourn the public examination generally and suspend the discharge period (see paragraph 14.48 and chapter 13 generally regarding enforcement).
Notes: [s.279(3)] [R.6.176(4)][s.290(1)] [R6.172]
24.14 Inspection
An inspection should be carried out where one or more of the circumstances listed at paragraph 8.4 exist, (see also paragraph 8.6). If the bankrupt cannot be traced the official receiver should contact the landlord to gain access to any premises the bankrupt has occupied. An inventory should be taken (see paragraph 8.34). In very exceptional circumstances, for example where the contents are extensive, consideration should be given to the employment of an agent to do this (see paragraph 8.35, and chapter 32.3).
24.15 Powers
The official receiver has the same powers as a receiver or manager appointed by the High Court for the purpose of protecting the bankrupt’s estate. Such a receiver or manager would be appointed on the application of a person to safeguard an interest in a property for the benefit of those entitled to it. There are two main classes of cases in which the appointment is made:
for example following default in payment of the principal or interest due on a loan charged on the property, a receiver may be appointed over the mortgaged property. An appointment might also be sought in respect of personal chattels to protect them, eg pending the obtaining of probate/administration of a deceased’s estate. The express powers of a receiver or manager are set out in the order appointing him, and the classic form of order appointing a receiver empowers him to "collect get in and receive" the property in question. The express power impliedly authorises acts incidental to or consequential to the carrying out of the object encompassed by the express powers. Accordingly, he has the power to insure property subject to his appointment against damage by fire and to collect any rental income. He may also pay out small sums of money in respect of repairs or may allow such to a tenant. Major works may not be undertaken without reference to the court. By implication he has power to take steps to generally protect the property/chattels covered by his appointment but in so doing must be mindful not to prejudice the rights of others. He does not have the power of sale of property/chattels subject to his appointment or to borrow money without leave of the court.
Notes: [s287(2)(a)] [s.37 Supreme Court Act 1981]
24.16 Power of sale
The official receiver may sell or otherwise dispose of any perishable goods. Perishable goods usually encountered are foodstuffs eg at a greengrocer’s or fishmonger’s shop; prompt action by the official receiver or his agent will increase the return to the estate. (See paragraph 24.18 - landlord unable to distrain on perishable goods.)
Notes: [s287(2)(b)]
24.17 Power of sale; "any other goods"
The official receiver as receiver and manager also has power to sell/dispose of any other goods the value of which is likely to diminish if not disposed of. This sub-section is open to wider interpretation and might cover seasonal wares such as Christmas cards, decorations, trees; also it will apply where the removal, storage and insurance costs of stock or other assets are substantial in relation to its value.
Note: [s287(2)(b)]
24.18 Power of sale; goods at risk from distress
Another example would be stock at risk from distress. Under section 347 a landlord may levy distress upon the goods and effects of an undischarged bankrupt for an amount equal to six months arrears of rent in any period prior to the making of the bankruptcy order (see also paragraphs 9.38 to 9.40). In the event that the goods are distrained upon, their value to the general body of creditors would diminish. However, the official receiver should be wary in removing items from premises of leaving himself open to criticism of sharp practice, as his actions could be said to be against the spirit of the Insolvency Act 1986 as the right of a landlord to distrain for rent upon goods of an undischarged bankrupt is specifically preserved. In the normal course of events, when the official receiver has not been formally notified of an intention to levy distress he should arrange the removal and storage or sale of any relevant assets if he considers such action to be in the best interests of the main body of creditors.
Certain items are absolutely privileged from distress ie they may not be taken. Such goods include perishable items ie "articles which cannot be restored to the same state and condition that they were in prior to distraint". Perishable goods (see paragraph 24.16 above) should be disposed of by the official receiver whilst receiver and manager even if the official receiver is aware that a landlord is intending to levy distress.
Note: [s347]
24.19 Power of sale; goods at risk, access to premises
Assets may also be at risk in trading premises where people have access to the premises for example a shop with flats above, the only access being through the shop. Such access might result in assets "disappearing" especially where those persons with access are also creditors of the bankrupt.
24.20 Receipt of book debts
Payments in respect of book debts are often received by the official receiver being delivered by the bankrupt or included in re-directed post. The amounts received should be credited to the estate account and fees should be charged. The official receiver should not hold cheques or cash pending a meeting of creditors. Although cheques drawn in the bankrupt’s favour will tend to be crossed "a/c payee", official receivers should be able to clear the payment of such cheques.
Notes: [Article 4 and part 5, Para II of the Sch. to Insolvency Fees Order 1986 (as amended)]
24.21 Livestock/ dangerous animals
The official receiver will need to make arrangements for any livestock to be fed pending the meeting of creditors or other appointment of a trustee. In practice the bankrupt will usually be prepared to do this, not wanting to see the animals suffer. The official receiver will need to ensure there is sufficient feedstuff and arrange the provision of new supplies. The official receiver should only become responsible for the payment of the post bankruptcy order supply on appropriate terms and should pay the accounts submitted, passing the debit balance to the trustee.
Where the livestock concerned is extensive, the livestock comprises dangerous animals or in any case where the public could be at risk, for example sheep or horses straying on to the public highway, the official receiver should urgently consider applying either to the Secretary of State for the appointment of a trustee (after first issuing the notice of no meeting to creditors) or to the court for the appointment of a special manager. See paragraphs 8.21 (livestock), 8.22 (dangerous animals), chapter 17 Part 5 (Secretary of State appointments) and chapter 32.4 (special managers).
Notes: [s.370]
24.22 Meetings of creditors
The official receiver may, and, if directed by the court, shall, call a meeting of creditors, for example, to authorise a sale of assets. One or more aggrieved creditors could apply to the court for an order directing the official receiver to summon a meeting where they wish to be involved in deciding how the bankrupt’s assets are dealt with. In practice the holding of such meetings is a very rare occurrence.
Note: [s287(3)(c)]
24.23EA First meeting
The official receiver must within 12 weeks of the making of the bankruptcy order decide whether to summon a general meeting of creditors to appoint a trustee. In practice the official receiver should aim to hold all meetings of creditors within that 12 week period or to issue notices informing creditors that the official receiver does not intend to call a meeting within 8 weeks of the making of the bankruptcy order, at the same time issuing the report to creditors. (For guidance generally regarding meetings of creditors see chapter 16.)
Notes: of creditors [s.293]
24.24 Third party property
Once the official receiver has been made aware that the bankrupt holds third party property, he should contact the owners to make arrangements for the collection of their property, stating that he cannot be held responsible for it in the interim period. Proof of ownership should be required to be produced prior to removal and a receipt obtained for the goods. The bankrupt should be encouraged to label any third party property, perhaps at the inspection, to assist with subsequent identification (see paragraph 8.37). In the event that the official receiver at the time of a seizure or disposal of some property considers that he has reasonable grounds for believing that he is entitled to seize or dispose of that property, the official receiver is not liable to any person in respect of any resulting loss or damage unless that loss or damage is caused by his negligence. On being provided with satisfactory proof of ownership he should return the sale proceeds after deduction of any agent’s costs and any other expenses incurred in connection with the seizure or disposal.
Notes: [s287(4)]
24.25 Solely owned freehold/ leasehold property; sale, no "chain"
In cases when the exchange of contracts on the sale of a freehold or leasehold property, in the sole name of the bankrupt is imminent at the date of the bankruptcy order, Departmental lawyers have advised that the question of whether the realisation of the property for the purposes of protecting the estate is permissible under s287(3)(a) is an evenly balanced one, each case should therefore be dealt with on its merits. The primary matter to be considered is whether the official receiver’s failure to allow the sale to proceed will result in a loss to the estate. Agents should be consulted on whether the agreed sale price is a fair one. They should also be consulted regarding the state of the market, for example if this purchaser were to pull out is it likely that another purchaser would be able to be found quickly? The official receiver might be advised that the agreed sale price is a favourable one, that the market is slow moving and that a new purchaser may be difficult to find. Balancing this against possible increasing arrears on the mortgage, the official receiver may decide to allow the sale to proceed. In cases where dealing with this aspect of a case is likely to be particularly time consuming, the official receiver could consider applying to the Secretary of State for the appointment of an insolvency practitioner as trustee. However, such an appointment would only be possible if the official receiver first became trustee (see chapter 17, part 5 generally regarding Secretary of State appointments). Attempts to join the official receiver, whilst receiver and manager, in the sale of a property should be resisted as the bankrupt’s interest in the property will not have vested in the official receiver (jointly owned property would never vest, see paragraph 24.27). The solicitor acting on behalf of the bankrupt should be required to hold the net sale proceeds to the official receiver’s order pending the appointment of a trustee. Where the official receiver permits the sale to proceed, the bankrupt will need to apply to the court to gain its consent to the sale of the property. The official receiver should support or not oppose the bankrupt’s application.
Notes: [s.296] [s.284][s287(2)]
24.26 Solely owned freehold/
It is possible that although a property is in the sole name of a bankrupt another person, usually their spouse/partner, may have a beneficial interest in the property. In these circumstances where the official receiver is satisfied as to the existence of the spouse/ partner’s interest in the property he should deal with the property as if it were jointly owned (paragraphs 24.27 and 24.28). For further information regarding a third party having a beneficial interest in a solely owned property (see paragraphs 33.6, 33.7 and 33.8).
Notes: leasehold property; third party with beneficial interest
24.27 Jointly owned freehold/ leasehold property;
The legal title in a jointly owned property vests in the owners as joint tenants and is not severable. It is the bankrupt’s beneficial interest and not the legal title which will subsequently vest in the trustee (see paragraph 38.9). Where the sale of a jointly owned property is proposed, the official receiver should make enquiries to establish that the agreed sale price is a fair one. If the official receiver is advised that the agreed sale price is substantially below the market price and there is no apparent reason for this, for example the property being in poor condition, the official receiver should intervene to prevent the sale. Failure by the official receiver to prevent a sale of the property in these circumstances could result in an action for negligence being brought against him subsequently by the trustee. The solicitor acting for the bankrupt and the joint owner in the sale of a property after the bankruptcy order should be requested to hold the bankrupt’s share of the net proceeds to the official receiver’s order, pending the appointment of a trustee. It is not necessary for the bankrupt to obtain the consent of the court to the sale of a jointly owned property.
Notes: sale, no "chain" [s.287(3)] [s.284(6)]
24.28 Solely/jointly owned freehold/
It is probable that the sale of the property will be part of a chain of property transactions. Invariably the sale proceeds will be used to part-finance the purchase of another property and will thus largely be preserved. Where exchange of contracts has already occurred there will be a legal obligation on the bankrupt/and the other joint owner to complete the transaction(s). The official receiver should not attempt to prevent the completion of the sale in these circumstances, save where the official receiver is advised that the agreed sale price is substantially below the market price and there is no apparent reason for this, in which event he should consider whether to disclaim the contract (section 315(1)) if subsequently appointed trustee. With regard to the purchase of a property, where contracts have been exchanged, the official receiver may intervene to prevent completion on the grounds that the purchase would amount to a depletion of the estate (see below). However, if completion of the purchase is prevented the vendor may sue for specific performance or bring an action for damages against the official receiver. The vendor is also entitled to retain any deposit paid (usually 10% of the agreed price). Each case should thus be considered individually. Where the official receiver is content to let the purchase proceed he should ensure that the proposed mortgagee is aware of the bankruptcy proceedings. In the event that the funds are subsequently advanced no offence of obtaining credit should be contemplated. Before completing the purchase the bankrupt/joint owner should be informed that the trustee will wish to realise the bankrupt’s beneficial interest in any property in the course of his administration of the estate. In the light of this information he/they may decide not to proceed in the purchase of the property. If exchange of contracts has not occurred, the official receiver should notify the bankrupt and the joint owner that he is not content for the sale proceeds/the bankrupt’s share of the sale proceeds to be used in the purchase of another property. Such a use of the proceeds would represent a depletion of the estate as solicitor’s fees, Land Registry fees and stamp duty would be payable in connection with the purchase. Failure by the official receiver to take steps to prevent the purchase could result in a negligence action being brought against him by the trustee.
Notes: leasehold property; sale "chain" involved [s360] [s.287(3)(a)]
24.29 Jointly owned freehold/ leasehold property, at risk
(September 2008)
Where the official receiver believes that a jointly owned freehold or registered leasehold property may be at risk, he/she should register a Form J restriction against the property at the Land Registry (see Chapter 50, Part 7). A Form A restriction should also be registered to protect the interest in land (see paragraphs 50.36 and 50.37).
The official receiver must be trustee when he/she seeks to register a Form J restriction. If the official receiver is receiver and manager and has reason to believe that a property is at risk, he/she should take the necessary steps to become trustee or to seek to have a trustee appointed, so that a Form J restriction may be registered (see Chapter 17 for further information regarding the appointment of liquidators and trustees).
24.30 Rents, the collection of; general position
Where a bankrupt has granted a lease or tenancy over his property, rent will be payable by the occupant. The agreement to occupy the premises may be written or verbal but as long as it is not a tenancy on sufferance, the official receiver whilst receiver and manager should continue to collect the rent, as rental income is an asset of the estate. A tenancy on sufferance exists where a tenant continues to occupy a premises after the expiration of the fixed term of a tenancy without the landlord’s consent or on determination of a tenancy at will. A tenancy at will exists where a tenant is in possession of land with the consent of the landlord, it is not for a fixed term. Rent should also not be collected in other circumstances where a property is occupied against the wishes of the landlord, for example where there are squatters in residence. If a mortgagee has entered into possession of a property at the date of the bankruptcy order, the official receiver should make no attempt to collect the rent but should inform the mortgagee of the bankruptcy proceedings.
24.31 Insurance covenant
In the event that an insurance covenant is present in a lease or tenancy agreement, the liability to perform that covenant will pass to the trustee on appointment. Whilst the official receiver as receiver and manager is not liable under such a covenant, where it is present in a lease or tenancy agreement and the official receiver collects the rent he should ensure that the cover is current, if necessary, by paying premiums due from the date of the bankruptcy order from rent received. Where the tenant/lessee is liable to contribute to the insurance premiums the relevant funds should be collected from him. The continuation or taking out of insurance cover will protect the official receiver from a claim for damages being brought against him. (See paragraph 24.8 and chapter 49 generally regarding insurance).
24.32 Rents, the collection of; bankrupt sole owner of freehold reversion or tenanted property
The reversion in a bankrupt’s property held on lease or a tenancy agreement vests in the trustee whether or not he collects the rent. The official receiver when receiver and manager should therefore collect such rents to preserve this income pending the appointment of a trustee. Where the bankrupt has a mortgage on the property either in his sole name or jointly with another, the official receiver should ensure that the mortgagee is aware that the premises are occupied under a lease or tenancy agreement. The mortgagee should be given the opportunity to appoint a receiver to collect the rent or otherwise deal with the situation, the granting of the lease or tenancy almost certainly being a breach of a term of the mortgage unless consent had been given. In the event that the mortgagee indicates that it does not intend to act, the official receiver should continue to collect the rent. Where the insolvent has been accustomed to using the rent to pay the mortgage this alone would not affect the official receiver’s right to collect the rent. Generally, the rent collected by the official receiver should not be remitted directly to the mortgagee in repayment of mortgage instalments. However, where there is likely to be a net benefit to the estate if possession of the property is retained, eg where a viable business is being carried on from it and there is a risk that if mortgage repayments are not made then the mortgagee will enforce his security, then the official receiver may be justified in utilising rent received in paying mortgage instalments as they fall due on the basis that by so doing he is protecting the estate. This matter will require careful consideration and, usually, specialist advice.
Note: [s283, 306, 436]
24.33 Rents, the collection of; bankrupt joint owner of leasehold reversion or tenanted property
The bankrupt’s joint interest in the leasehold reversion or tenanted property will vest in the trustee. The official receiver as receiver and manager should continue to collect that proportion of the rent to which the bankrupt is entitled. Where a jointly owned leasehold reversion or tenanted property is subject to a mortgage, the position with regard to the payment of mortgage instalments falling due is the same as when the bankrupt is the sole owner of a mortgaged leasehold reversion or tenanted property. However, if the mortgage is a joint mortgage it may provide for joint and several liability, thereby entitling the mortgagee to claim the entire arrears and instalments as they fall due from the non-bankrupt joint mortgagor.
Note:
24.34 Rents;
Where the reversionary interest or tenanted property is subject to onerous covenants which would prevent the trustee disposing of the reversion for value or which impose obligations which could result in expenditure from the estate, for example an obligation to repair the premises, the official receiver as receiver and manager may still collect the rent but should seek to disclaim the lease or tenancy if subsequently appointed trustee.
Notes: onerous covenants [s.316, 317 and 318]
24.35 Rents, "informal tenancy" dwelling house
Where a bankrupt rents out a room in his home under an "informal arrangement", rent should not be collected. The collection of rent in these circumstances could operate to create a tenancy between the official receiver and the tenant. In addition, the existence of a sitting tenant will adversely affect the prospects both of the trustee finding a purchaser for the property and the price he is able to obtain for it. However, the amount received by the bankrupt by way of rent should be taken into account when assessing the amount to be paid under an Income Payments Order. (For further information regarding the collection of rent see chapter 31.3).
24.36 Exempt property
The official receiver when receiver and manager does not have the power to realise exempt property since exempt property does not form part of the bankrupt’s estate. (For guidance regarding action to be taken, in connection with exempt property, by the official receiver whilst receiver and manager see paragraphs 31.2.10 and 31.2.11).
Note: [s283(2)]
24.37 Matrimonial proceedings after bankruptcy order
Where the official receiver becomes aware that matrimonial proceedings are ongoing/pending he should immediately notify the relevant court, the bankrupt’s spouse and solicitors of the making of the bankruptcy order to avoid property settlements being made prior to the appointment of the trustee. Whilst the bankrupt still owns all of his assets up to the vesting of the estate in the trustee, he cannot validly dispose of them. In order to be valid, any disposition would need to be made with the consent of the bankruptcy court or subsequently ratified by it. If the consent or ratification is obtained, the settlement may not be subsequently upset. The official receiver should attempt to get the matrimonial proceedings stayed or adjourned until the trustee is in office, preventing possible depletion of the estate (see paragraphs 33.25 and 33.28).
Notes: [s.284]
24.38 Legal proceedings taken by creditors
Creditors in respect of debts provable in the bankruptcy are unable to take proceedings for recovery against the bankrupt (subject to enforcement procedures and a landlord’s limited right to distress) except with the leave of the bankruptcy court and on such terms as it may impose. Whenever the official receiver becomes aware of an action being taken by a creditor, other than a secured creditor for recovery of the property over which it holds security, he should notify the relevant court, the creditor bringing the action/its solicitor of the making of the bankruptcy order and the effect of it. Such action by the official receiver will prevent the creditor incurring further costs and the possibility of an attempted execution which could put the estate at risk.
Note: [Ss.285, 346 and 347]
24.39 Third Parties (Rights Against Insurers) Act 1930
Whilst receiver and manager, the official receiver does not have a duty to provide necessary information to third parties for the purpose of ascertaining whether any rights have been transferred to and vested in them by the Act and for the purpose of enforcing such rights. The official receiver only becomes liable to provide information in connection with this Act when he becomes trustee (see chapter 79).
24.40 Notice to elect
In the event that a landlord attempts to serve notice to elect on the official receiver whilst acting as receiver and manager, the official receiver should contact the landlord/his solicitors to inform them that the official receiver as receiver and manager is unable to accept service, having no power of disclaimer as, at that time, he is not the trustee. The official receiver should undertake to notify the landlord of the name and address of the trustee once appointed so that the matter of disclaimer may then be considered, Form B25.03 (Notice to Elect - OR not trustee) should be used for this purpose. A defective notice served on a receiver and manager does not become effective on the appointment of a trustee.
Notes: [Form DMRORX][s316(1), R6.183, Form 6.62]