Public Examinations
April 2007
Introduction
i What is a public examination?
A public examination (more commonly known as a 'PE') is the oral examination of an individual on oath in open court. It may be held at any time before a bankrupt’s discharge or the dissolution of a company in a winding up.
ii Why is a PE held?
There are two main reasons for holding a PE. They are:
a to enforce an individual’s attendance/co-operation on or with the official receiver
b as an aid to the official receiver’s enquiries for example regarding the discovery of assets.
The latter is only normally held in cases where someone is not co-operating fully with the official receiver or where evidence is needed on oath
In bankruptcy, the official receiver may also ask the court to suspend the bankrupt's automatic discharge.
iii Who may be examined?
The official receiver may apply to court for the PE of:
a a bankrupt or officer of the partnership/company
b any liquidator, administrator, or receiver or manager of the company
c any person who has been concerned or has taken part in the promotion, formation of the partnership/company or in the management of the company
For further detailed guidance on the persons that may be examined see Technical Manual Chapter 14 part 2.
iv When can a PE be held?
A PE can be held at any time before :
a the discharge of the bankrupt
b the dissolution of the company
c where a winding up order has been made against a partnership as an unregistered company, before the winding up is complete
d where orders have been made against the members of an insolvent partnership on a joint bankruptcy petition, without a winding up order being made against the partnership, before the discharge of any such member.
v Warning Letter
Before fixing a PE at least three attempts must have been made to arrange and advise the officer or bankrupt of the need to attend for interview. If two appointments have been missed with no explanation or contact, then the official receiver should consider a PE.
When PE is being considered because of non co-operation the official receiver should write to the potential examinee advising him/her of the possibility of a PE and that notice of it may be given by public advertisement.
Where the PE is to be fixed to enforce attendance, if the examinee has previously received written warning of the possibility of a PE in letters fixing appointments, it is not necessary to send an additional warning letter. LOIS form NTB1 gives the option to choose "further appointment" or "final appointment" and both options warn of the possibility of a PE.
vi PEs for enforcement purposes only
A PE should not be regarded as an automatic alternative to obtaining initial information by way of interview. The official receiver should also make proper use of his powers to requisition accounts and further information where this is likely to provide the details necessary for the purpose of his enquiries. The official receiver should remind potential examinees of their duty to co-operate where such non-compliance is the reason for the PE.
A PE may therefore be held where a bankrupt/partner/director fails to attend upon the official receiver. If the official receiver knows or is reasonably sure that the person is aware of the proceedings i.e. served personally with the petition or information has been received to suggest that the person is at the address to which notices have been sent, then the official receiver would normally apply for a PE. If a person fails to attend a PE the court is empowered to issue a warrant for that person’s arrest but will not be willing to do so if the bankrupt's current address is not known.
In bankruptcy cases application to suspend the bankrupt's discharge should be used as an alternative to fixing a PE, where the bankrupt's current whereabouts are unknown.
vii PEs of company officers
A PE should not be called simply because of the non-surrender of a director to the proceedings. PEs should only be held where there is a genuine intention to question the director over specific matters, such as the whereabouts of assets, etc.
viii PEs as an aid to the Official Receiver’s enquiries
If a bankrupt/partner or company director is being unco-operative by not disclosing something or the official receiver wishes to establish who was responsible for certain actions and events then he/she may use a PE. When a PE is used to examine a person under oath a shorthand writer will generally be present to record the proceedings. A full transcript of the hearing will then be typed from the shorthand writer’s notes. Generally, the transcripts cannot be used in criminal proceedings although they can be used in civil proceedings.
ix Requisition of PEs
Creditors and company contributories have the right to request that a PE be held. Their request must be supported by at least half in value of all known creditors (including secured claims) or by three quarters in value of the contributories shareholding. The request must also provide valid reasons as to why a PE should be held. A response to the requisition should be issued according to the circumstances of each individual case using form PERTR (available on the OROS Intranet site).
The official receiver is not obliged to hold a PE simply because he/she receives a request to do so. If the official receiver is of the opinion that the examination is not merited, he/she can apply to the court for relief from holding a PE but an application must be made within 28 days of receipt of the requisition notice (form PEAR available on the OROS Intranet site).
For further details on the requisition of PEs please see Technical Manual Chapter 14 part 3
x Expenses of the PE
When the official receiver decides to hold a PE the costs are paid out of the estate, even if a debit balance is incurred or increased.
In the case of a requisitioned PE, the official receiver must obtain a deposit to cover the costs of an examination from the requisitionist, although in certain circumstances, the court may order that the expenses are met by the estate.
If application is received where the examinee is unfit to attend or to resume a PE which has previously been adjourned, the official receiver must write using form PECOE to advise of the deposit required in these circumstances. Any such application should be referred to the examiner.
xi Service and notice of the order
Once the order fixing the date for the PE is received from the court, a letter (form PEN) and a copy of the order (PEAO) must be served on the person to be examined with at least 14 days notice. The letter should be sent by first class post and recorded delivery. Notice must be sent to all known addresses and a certificate of postage (form COP) prepared in every case.
The official receiver is also required to serve notice at least 14 days before the hearing on:
a any trustee/liquidator or special manager (form PENTL)
b all known creditors, if appropriate (form PENCC)
c in the case of a winding up, all known contributories (form PENCC)
The official receiver can apply to court for relief from sending notice to creditors and contributories and such direction should be sought where the PE has been called to enforce co-operation or where there are more than 50 creditors.
At least one week before the hearing the official receiver should consider sending a reminder letter to the examinee.
xii Advertisement
The official receiver has discretion to advertise the PE in a newspaper 14 days before the hearing by completing form NFN3 and LCAD LOIS, (DO73) and forwarding them as e-mail attachments to the advertising agents MKH Advertising Limited. See CHM part – Gazetting and Advertising, paragraph xiv and Procedure step 17
However, in a winding up the advertisement may not appear until 7 days have elapsed since the examinee was served with the order.
xiii What happens when we need a transcript of the hearing?
Where a written record of a court hearing is considered necessary the official receiver will require the appointment of a shorthand writer. A shorthand writer can be appointed directly by a court to act generally in that court, in which case a global declaration covering all insolvency matters will have been given. If the official receiver wishes to employ his/her own shorthand writer he/she should apply to the court using form PESWA. The costs of the shorthand writer must be met from the estate and the appointed shorthand writer must also make a declaration to the Court using form PESWD. Once notification is received that the transcript of the examination has been prepared form PELRV (and PEVER if required) should be issued to the examinee.
xiv What happens if the examinee co-operates before the hearing?
Where a public examination has been fixed because of non-surrender to the proceedings and the examinee subsequently surrenders and co-operates with the official receiver to an extent which makes a public examination unnecessary, the official receiver should apply to the court for a rescission of the order fixing the examination. The application should refer to the original order, briefly to the examinee’s subsequent conduct and state that in the circumstances a public examination would serve no useful purpose (form PEVOH).
If the examinee surrenders only a short time before the date of the hearing, consideration should be given to holding the examination as arranged, particularly where notice has been given to creditors or other parties or the examination has been advertised and there is no time to inform these parties that the examination will not now be held.
If a public examination has been held and adjourned but subsequent co-operation by the examinee makes the adjourned examination unnecessary, the court should be asked to declare the examination concluded.
xv Procedure at the hearing
The person being examined is under oath and must answer all the questions put to him, which are allowed by the court. Refusal to answer is a contempt of court. The examinee may be questioned by the official receiver or his/her representative, and also by any of the following:
a the trustee or liquidator
b any special manager
c any creditor who has tendered a proof of debt
d a contributory, in a winding up.
The official receiver may consider it sufficient to obtain an undertaking from the examinee as regards future co-operation or more specific compliance. Form PEGUTC (available on the OROS Intranet site) may be used for this purpose and the court may make such an order in relation to these matters (form PEADJ).
xvi Results of the hearing
Where the examinee has attended the PE the court may make a number of decisions, namely that the hearing be:
a adjourned to a date to be fixed, where for example, either the service was incorrect, further enquiries are needed, an order is obtained for compliance or where the examinee is unable to attend due to illness.
b adjourned generally, where for example the examinee does not give adequate answers to questions put or it is intended to hold interviews with the examinee to obtain further information. Where a public examination in bankruptcy is adjourned generally for any reason the official receiver may make a verbal application to suspend the operation of any automatic discharge period applicable until such time as he/she attends upon the official receiver and complies with his/her obligations.
c concluded, where the reason for holding the PE has been satisfied.
Forms PERES and PEVOH are available for use where either the official receiver wishes to restore the PE or the examinee has complied with his/her obligations.
Where the the examinee fails to attend the PE, without a reasonable excuse, the official receiver should consider requesting the issue of a warrant for the examinee's arrest (form PEWA).
For further information see Technical Manual Chapter 13 part 7.
xvii Differences between PEs and Suspension of Discharge Applications
PEs are held only where the official receiver is of the firm belief that the bankrupt is aware of the proceedings - i.e .where the petition was served personally or where the official receiver has received information which confirms that the bankrupt is at the address to which notices have been sent.
An application to suspend discharge, instead of a PE, should only be made when it has become apparent that the bankrupt is unaware of the bankruptcy order i.e. where every effort has been made to contact the bankrupt using all sources available even where the petition could not be served personally, or where all correspondence has been returned by the Post Office.
PEs are heard in open court whilst applications to suspend discharge are held in chambers.
For further information on the procedure for suspension of discharge see Case Help Manual part : Discharge from Bankruptcy paragraph viii and Procedure - suspension of automatic discharge
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Where can I find out more ? Insolvency Act 1986 Section 290 PE of a bankrupt Section 133 PE of company officers Section 134 Enforcement of Section 133 Section 279(3) Discharge period Insolvency Rules Rules 6.172 to 6.177 PE of a bankrupt Rules 4.211 to 4.217 PE of company officers and others Rule 7.16(3) Shorthand Writer Application by Official Receiver Rule 9.4(6) Record of examination Technical Manual Chapter 13 Co-operation, non co-operation and enforcement of duty to co-operate Chapter 14 Public Examinations Case Help Manual LOIS Workbook Non Co-operation, Non Contact Process Forms to be used: PEN and PEAO - these form replace separate LOIS forms and cover bankruptcy, partnership and company cases. LOIS/DOC1 will require you to choose the appropriate implementation for the particular circumstances of the case. COP Certificate of postage LCAD Letter covering advertisement NFN1 Notice for newspaper (bankruptcy) NFN3 Notice for newspaper (company/company partnership) NTB1 Notice to bankrupt(1) PENCC Public Examination Notice to Creditor or Contributory PENTL Public Examination Notice to Trustee or Liquidator PEGUTC General form of undertaking PEADJ PE adjourned PERES PE Resurrection PESWA PE Shorthand writer application PESWD PE Shorthand Writer Declaration PELRV Letter re verification PEVER PE Verification PEVOH PE Verification of Hearing PEWA PE Warrants PECOE PE costs and expenses PEAR PE application for relief PERTR PE response to requisition
Click HERE to view the flowchart for Public Examinations
5. Prepare copies of the form PEAO as follows:
Once the application has been signed by the assistant official receiver/official receiver, retain one copy on the office file and send the remaining papers to court for sealing. Request the court to retain one copy of all papers for their file and to seal and return the remaining papers. Diarise for a prompt reply from court. 6. Once the sealed orders are returned from court send notice (form PEN) to the person to be examined at each known address enclosing a sealed copy order of PE by first class post and recorded delivery. At least 14 days notice must be given. 9. If PE is to be advertised allow at least 7 days after service of the notice on the examinee before preparing forms LACD( letter covering advertisement) and notice of PE (NFN1/3)on LOIS (DO73). In company cases the 7 day period is a requirement. The advertisement must appear at least 14 days before the day fixed for the hearing.
14. Give file to official receiver/assistant official receiver at least 5 working days before the hearing. 17. Allow 1 week for receipt of copy of order from court. Chase up if necessary. Order received from Court If Shorthand Writer retained 21.The shorthand writer will send a copy of the transcript in due course. It will be the examiner’s responsibility to check the shorthand writer’s notes and approve their remuneration. Issue forms PELRV and PEVER to the examinee, if appropriate |