Stay Of Advertisement
July 2008
Introduction
i Why is the bankruptcy or winding-up order advertised?
The official receiver is required by the Insolvency Rules to advertise every bankruptcy order and winding-up order made, in both the London Gazette and a newspaper, (usually a local one). This serves as general notice to anyone who wishes to know, that the individual, partnership or company named has been the subject of an insolvency order.
For more information on the insolvency notices appearing in the London Gazette and in newspapers, please refer to the Case Help Manual (CHM) part – Gazetting and Advertising
ii Who might see the advertisement?
Some credit reference agencies may record details of all bankrupts, partnerships or companies appearing in the London Gazette and will provide this information to other businesses for a fee. Furthermore, local business suppliers and customers may see the advertisement in the local paper. Thus, advertising in the London Gazette or local newspaper can seriously affect the credit worthiness of an individual, a partnership or a company.
iii Why would an advertisement have to be stopped or stayed?
An insolvency order can be overturned by an order of the court, which can annul a bankruptcy order or rescind or recall a winding-up order.
If a bankrupt, partner or director is going to ask the court to overturn the insolvency order and does not want anyone to know of the order, they may apply to the court for an order that the official receiver refrains from advertising the insolvency. This is known as ‘a stay of advertisement‘. The main objective of a stay of advertisement is to prevent publicity of the insolvency order and to preserve the integrity and reputation of the bankrupt, partnership or company. A stay of advertisement should be associated with another impending application, e.g. for annulment or rescission, and should not be 'free standing'.
iv Who orders the stay of advertisement?
The normal progress of a case may, for various reasons, be stayed by an order of the court. The court may order either a stay of advertisement only, or a stay of all proceedings.
A stay of proceedings means that the insolvency is stayed altogether or permanently, and is often referred to as ‘stayed generally’
For further information regarding a stay of proceedings see CHM Part – Stay of Proceedings
v When would the official receiver stop publication of a gazette notice and newspaper advertisement?
A gazette notice and local newspaper advertisement must be prepared in every case where an insolvency order has been made. However, if the advertisement notices have not yet been generated and the official receiver is notified of an order staying the proceedings, or of an order for a stay of advertisement, or notice is received of an application for any stay, the notices must not be generated.
If already prepared, the official receiver should make every effort to prevent their publication.
vi Stopping a Gazette notice
It is important to remember that when a copy of the gazette notice is generated by LOIS, it is automatically downloaded to a file that is monitored by CUST. This file is populated by users throughout the day, then at 0500 hours each day the file is automatically formatted. It is then available for the Fees & Data Management (F&DM) team, within the Estate Accounts Services (EAS) to access and deal with gazette notices, as appropriate.
If the gazette notice has already been generated, the official receiver must e-mail the (F&DM) team at EAS, gpt.gazettestays@insolvency.gsi.gov.uk, as soon as notification is received that a court order for a stay of advertisement has been made, or that such an application has been made and is pending. Where it is possible to stop publication of the gazette, the F&DM team will allocate a unique security number and reply to the local office e-mail, with the security details. A copy of the e-mail should be placed on the case file.
Gazette notices are usually published on the second working day after receipt by the F&DM team. A gazette notice can only be stopped where notification is received before midday on the day before the publication date.
vii Stopping a newspaper advertisement
Where notice to the newspaper has been prepared but not yet dispatched, retrieve all copies awaiting forwarding to agents and destroy them, together with any other file copies. Make a file note of the action taken and the reason for it and place it on the case file.
Where the newspaper advert has been sent, e-mail or telephone the Service’s advertising agents immediately with instructions to cancel publication. If contact is by telephone obtain the name of who is spoken to and make a file note of the actions taken. Follow up the telephone call to the agents with confirmation in writing of the cancellation of the newspaper advertisement. Place the file note, copy letter, or a copy of any e-mail exchanges on the case file and destroy any copies of the advert that may already have been filed.
viii The Service’s advertising agents – MKH Advertising Limited
The Service has an agreed Service Level Agreement (SLA) with Michael K Howard (MKH Advertising Limited), which has operated since 2002. The SLA is reviewed yearly, and the service delivery standards have remained constant since that time. The one main change in procedure is that invoicing has now been centralised, and all collating and payment of invoices raised is done through OR Operations Section (OROS). Invoices are no longer sent to individual official receiver’s offices.
The SLA is available to view on the Intranet ‘ Service Level Agreement between The Insolvency Service & Michael K Howard – Dated 26/03/02 ‘
The contact details are: MKH Advertising Limited, Opal Drive, Fox Milne, Milton Keynes, MK15 0DF (DX – M K Howard, DX 54454, Milton Keynes 1) telephone number 01908 572456.
A full list of regional and local office contacts can be found in the OROS Bulletin January 2008
ix Official receiver's role
It is essential that the official receiver obeys a court order for a ‘stay of advertisement ‘. If not, the bankrupt, partnership or company concerned may be adversely listed for credit, have their reputation harmed, or find that people stop doing business with them. They may subsequently seek damages from the official receiver for failing to obey an order of the court. For this reason, the official receiver must act immediately when made aware of an order, or a pending application for an order, for a stay of advertisement. For the official receiver's purpose, a ‘general’ stay of advertisement does not just cover the gazette notice and newspaper advertisement. The official receiver should also refrain from sending notice to the Land Registry, issuing other initial notices, sending reports and notices to creditors and entering into correspondence with any other third party.
Where the court grants a general ‘stay of advertisement’ and the official receiver is of the opinion that it will affect the essential handling of the case, in particular in safeguarding assets, the official receiver might need to seek the directions of the court to undertake a limited range of duties, contacting third parties as necessary.
x ‘Stay of advertisement’ (suspension of official receiver’s duty to advertise etc.)
In considering an application for a ‘stay of advertisement’ the official receiver may seek the court’s agreement to limit the application to focus on suspension of the official receiver’s statutory duties to advertise under the Insolvency Rules. The effect of an order suspending action by the official receiver under these terms is not a ‘stay of advertisement’ generally. Specifically, it would direct that the insolvency order is not advertised in the London Gazette or other newspaper and in the case of a bankruptcy, that notice of the bankruptcy order is not given to Land Registry, and it is not entered in the Individual Insolvency Register (IIR).
xi Official receiver to act only on formal notice of a stay application
Under no circumstances should the official receiver agree not to advertise merely because the bankrupt, partner or director states that they intend to apply for a stay of advertisement. Unless the official receiver has received notice of an application to the court for a stay of advertisement, matters should proceed as normal. In the event of any uncertainty, refer the matter to the examiner for clarification.
xii What is the difference between a stay of advertisement and a stay of proceedings?
A stay of advertisement, whether general or specific, only prevents new publicity of the insolvency order. This will affect the gazetting and advertising, and may affect the issuing of the official receiver’s initial notices and any reports to creditors etc. However, the official receiver is still obliged to recover or secure any assets.
An order for a stay of proceedings brings the administration of the insolvency to a halt and prevents the official receiver from taking any action in relation to the case, even where there are assets which may or may not be in jeopardy. Where a stay of proceedings is in force and the official receiver has any concerns regarding the length of the stay, the wording of the order or how the official receiver’s statutory duties are to be carried out, he or she should seek the directions of the court to clarify as to how, if at all, any aspects of the estate may be administered.
For further information on what is involved in a stay of proceedings, please refer to the CHM part – Stay of Proceedings. It should be noted that a stay of proceedings does, by its very nature, prevent any advertisement.
xiii Length of the ‘stay’
A stay of advertisement is usually for a specified length of time and is connected with an application for annulment, rescission or recall of the insolvency order, or a proposal for an Individual Voluntary Arrangement (IVA).
For further information see CHM part – Annulments, Rescissions and Recalls
For further information on what is involved with an IVA please refer to the CHM part – Individual Voluntary Arrangements
xiv What happens when the stay of advertisement expires?
If the application associated with the stay of advertisement succeeds, i.e. the bankruptcy order is annulled or winding-up order is rescinded or recalled by the court, then the official receiver no longer has to deal with the case other than to undertake appropriate functions such as, returning assets or accounting records to the insolvent.
The court may order that the stay be extended to a future date. The official receiver will then monitor matters and when the extension expires, the subsequent ruling of the court will be considered and implemented as appropriate.
If however, the application fails, then the normal advertising and administrative procedures are resumed. It is essential to generate a new gazette notice and newspaper advertisement in all cases where the originals had been stopped.
Where the stay is lifted and deadlines relating to the decision to hold a meeting or the fixing of a meeting cannot be met, application must be made to the court for an appropriate extension of time.
Notes
a A stay of advertisement in relation to winding up proceedings is a rare
occurrence and should be referred immediately to the examiner for
instructions, when notice is first received.
b Where the court orders a stay of advertisement only in a bankruptcy or
winding up, this will not affect the obligations of a bankrupt, partner or
company officer to co-operate with the official receiver by attending for
interview or in the supplying of information.
Where can I find out more?
Insolvency Rules 1986
Rule 4.21(4) – Advertisement (company)
Rule 4.48 – Winding up stayed
Rule 6.34(2) – Action to follow the making of a bankruptcy order (creditor's petition)
Rule 6.34(3) – Suspension of action under rule 6.34(2)
Rule 6.46(2) – Action to follow the making of a bankruptcy order (debtor's petition)
Rule 6.46(3) – Suspension of action under rule 6.46(2)
Rule 6.208 – Power of court to stay proceedings (bankruptcy)
Rule 7.47 – Appeals and reviews of court orders (winding up)
Technical Manual
Chapter 4 paragraph 4.17 – Gazetting and advertising
Chapter 4 paragraph 4.28 – Annulments and stays of proceedings and advertisement
Chapter 5 paragraph 5.6 – Audit Section (now F&DM team of EAS) to be notified of stay
Chapter 5 paragraph 5.7 – Stay of advertisement (bankruptcy)
Chapter 6 paragraph 6.31 – Request to refrain from taking steps before court order made
Chapter 7 paragraph 7.34 – Pending rescissions, annulments and stays in High Court (Possible transfer cases)
Chapter11 paragraph 11.6 – Stay of advertisement
Case Help Manual
Annulments, Rescissions and Recalls
Individual Voluntary Arrangements
Service Level Agreement with Michael K Howard
Service Level agreement between The Insolvency Service & Michael K Howard – Dated 26/03/02
OROS Bulletin
January 2008 – Advertising
Notices
Finance: F24/04 – Stay of Advert and Cancellations London Gazette
LOIS Workbook
Annulments Process – screen 6
The Insolvency Service Leaflet
‘Can My Bankruptcy be Cancelled – Information on annulment of a bankruptcy order’
Available online at www.insolvency.gov.uk - Publications, and from any official receiver’s offices.
Click HERE to view the flowchart for Stay of Advertisement
Click HERE to view the flowchart for Stay of advertisement ‘Case for Transfer’
Procedure
1 Upon receipt of either, a court order for a stay of advertisement, notice of an application for a stay of advertisement, or a written instruction from a senior colleague, every effort must be made to prevent the preparation, dispatch and publication of any advertisement, in the London Gazette and in any other newspaper.
2 If the gazette notice and newspaper advertisement have not yet been prepared, record details of the stay on LOIS (CA06) and await further instructions.
Gazette notice
3 If generated, the gazette will usually be published 2 working days after it is dealt with by the F&DM team of EAS. An e-mail to the F&DM team, gpt.gazettestays@insolvency.gsi.gov.uk, must be sent immediately, when informed that a court order for a stay of advertisement has been made, or that such an application has been made and is pending. Publication can only be stopped if the F&DM team receives notice of the stay before midday on the day before it is due to be published.
4 If publication of the gazette can be stopped, the F&DM team will send a return e-mail detailing the allocation of a unique security number. A copy of the e-mail must be placed prominently, on the case file.
Newspaper advertisements
5 Where notice to the newspaper has been prepared but not yet dispatched, retrieve all copies immediately and destroy them, together with any copies. Make a file note of the action taken and place it on the case file, in a prominent position.
6 Where the advertisement has been sent, e-mail or telephone the Service’s advertising agents immediately, with instructions to withdraw publication. If contact is by telephone, obtain the name of the person spoken to and make a file note of the action taken and confirm the cancellation in writing to the agents. Place the file note, copy letter, or copies of any e-mail exchanges on the case file. Be sure to destroy any copies of the advertisement that may have been placed on the case file.
7 Inform the examiner immediately if you are unable to prevent the gazette notice or newspaper advertisement from being published.
8 Enter details of the stay onto LOIS (CA06).
9 If there is a stay of advertisement, do not send form LRRABO, LOIS (DO73), – ‘Land Registry, register BO or amend registration’ to the Land Registry.
10 Do not send any other initial notices or reports and notices to creditors whilst there is a general stay of advertisement in force, or enter into any correspondence with any other third party. If you are in any doubt as to how to proceed with a certain matter, refer the query to the examiner.
11 If the stay expires and the court orders that it is lifted, check with the examiner to ascertain whether any advertisements may now proceed. Make a file note if the guidance is not given in writing. Where the stay has been lifted, the case will be administered in the normal way. It will be necessary to generate a new gazette notice in all cases where the original has been stopped by the F&DM team of EAS.
12 If the stay has been extended, inform the examiner, note the new expiry date and update details on LOIS (CA06).
13 If the order is annulled, rescinded or recalled by the court, please refer to the CHM part – Annulments, Rescissions and Recalls for further information.
14 If the insolvency order is not annulled, rescinded or recalled, refer to the examiner for instructions on how to proceed.
Case for Transfer
15 If the case is to be transferred in or out, any application for a stay of advertisement will have to be heard in the originating court. However, where the transfer order has already been made, any application for a stay of advertisement will be heard in the receiving or ’new’ court.
16 If an office is informed of an order or application for a stay of advertisement whilst in the process of transferring a case out, the receiving or ‘new’ official receiver’s office must be informed immediately by e-mail or telephone, in order that any advertisement of the insolvency order can be prevented. (In these circumstances it is the receiving office that has the responsibility to advertise).
17 Where a case has already been transferred to another official receiver’s office, it is the duty of the receiving office, to ensure the insolvency order is not advertised, whilst a stay of advertisement is in force.