Where a practitioner ceases to be authorised, it is desirable that a successor practitioner is appointed to deal with any outstanding matters. This can often be achieved in an orderly manner, for example where a practitioner retires and his cases are taken over by a partner. However, it is not simple where an authorisation is withdrawn because the practitioner is considered not to be fit and proper, not least in finding a practitioner willing to be appointed in his place, for example, because there are inadequate records, few or no assets, or suspected dishonesty.

The appointment of a successor practitioner is desirable for a number of reasons, i.e. to:

1. gather evidence of dishonesty or other misconduct, where relevant;
2. maintain public confidence in the insolvency profession;
3. bring an insolvency to a satisfactory conclusion;
4. trace and realise assets;
5. pursue claims under the insolvency bond.

At a meeting between the Service and representatives of the authorising bodies it was felt that the initial obstacle, of identifying practitioners willing to accept appointments as successor practitioners, could be reduced by the setting up of a register of individuals willing to accept such appointments.

Practitioners are therefore invited to propose themselves for inclusion on that register, a copy of which will be held by each of the authorising bodies (except the Law Societies) and the Service. Letters, under the heading "Action After Loss of Authorisation" should be addressed to the insolvency practitioners Section, The Insolvency Service, Area 1.10, PO Box 203, 21 Bloomsbury Street, London, WC1B 3QW. The Law Society and the Law Society of Scotland, have in place adequate procedures to deal with the aftermath where the authorisation of a practitioner authorised by them is withdrawn. A "solicitor practitioner" is not barred from being appointed to deal with cases in which an "accountant practitioner" was previously office holder.

Practitioners should be aware that no funds, other than those comprised in the insolvency estate, or received under the insolvency bond, can be made available either by the authorising body concerned or the Service, to meet disbursements incurred or remuneration earned by the successor practitioner.

2.  Appointment by the Secretary of State under Section 137 and 296 of the Insolvency Act 1986

This guidance has now been amended.  Please see article 12

The guidelines to Official Receivers (ORs) concerning entry on to the rotas for Secretary of State trustee/liquidator appointments has recently been updated and this article has been revised to take into account those changes. IPs are reminded that since October 1997 entry on to rotas operated by individual ORs for has been by firm rather than by individual IP. The purpose of the rota is to ensure that ORs cannot be accused of favouring certain IPs. The existence of the rota also seeks to ensure that those concerned with the insolvency are not inconvenienced by the appointment of a distant trustee or liquidator.

Firms may be placed on an OR’s rota where they have a permanently staffed office with personnel who have sufficient knowledge to be able to deal with debtors, bankrupts, directors and creditors at any time within normal business hours.

The IP need not be based in the permanently staff office, but he/she is expected to exercise appropriate supervision of, and give direction to, the day to day casework; conduct regular reviews of papers and files through attendance at that local office or by those papers and files being reviewed at his/her principal office; and be available at the local office for interviews with bankrupts and directors, hold meetings etc. within normal office hours.

The criteria are designed to ensure that the firm has a genuine local presence. It has recently become clear to The Service, however, that firms are arranging to use the office of another business as a device to gain a place on a rota. These arrangements (contractual or otherwise) do not satisfy the criteria for entry on to a rota, as the firm does not have an office within the boundaries of the courts served by the OR, or a genuine local presence.

The firm itself must occupy and operate from an office within the boundaries of the courts, permanently staffed by people either employed by, or formally contracted to the firm. There should also be some physical sign of the firm’s occupation of the office, such as a nameplate near or on the door. As long as the criteria are met, there would be no objection to the firm sharing the office premises with another business. Finally, it is the OR’s rota, and so even if satisfied that the firm meets the criteria, he/she may still decide that the firm should not be on the rota. That would, however, be an exceptional situation, and the firm would be notified in writing of the decision and the reasons for it.

Other matters

Slightly different criteria operate with regard to the Regional rotas operated by, for example PRU (Protracted Realisations Unit) in Birmingham, and IPs are told of the respective entry criteria when each rota is drawn up.

General enquiries may be directed to IPU.Email@insolvency.gsi.gov.uk

4.    Timing of giving notice of appointment by a Liquidator/Trustee appointed by the Secretary of State

IPCU processes and certifies Secretary of State (SoS) appointment applications on receipt from the respective OR’s office and, when issuing the certificate of appointment to the OR, provides a covering letter addressed to the IP advising him/her that no creditors’ committee has been established. It also states that the IP may wish to consider convening a General Meeting for this purpose. Additionally, the letter also reminds the IP of the Regulations (and SIP 9) regarding fees and the relevant sanction required.

Sections 137(4) and 296(4) respectively require the appointed office-holder then to give notice of his/her appointment to creditors, or with the court’s permission and in accordance with any directions given, to advertise his/her appointment. The legislation is, however, silent on how soon after appointment this notification should take place.

At a recent meeting between the Monitors of the Recognised Professional Bodies and the Insolvency Service this issue was discussed. The general consensus of the meeting of Monitors was that a period of no more than 28 days after appointment seemed to be a reasonable timescale and that, as a matter of Best Practice, IPs should aim to either give notice of appointment to creditors or issue a notice convening a General Meeting within that period.

General enquiries may be directed to IPU.Email@insolvency.gsi.gov.uk

5.  The Principles for Monitoring of insolvency practitioners

The Secretary of State and the Recognised Professional Bodies (RPBs) have agreed a common set of principles to be adopted when monitoring insolvency practitioners authorised by them.

The purpose of monitoring is to enable the Secretary of State and the RPBs to make an objective assessment of the conduct and performance of practitioners, and to ascertain whether the practitioner is a fit and proper person to be an insolvency practitioner.

The principles cover the responsibilities of the Secretary of State and RPBs, guidance on the frequency of monitoring visits, key monitoring issues, liaison with other authorising bodies, and recommendations as to the content and timing of written monitoring reports.

The agreed Principles are published on the Service’s website at www.insolvency.gov.uk. look under “Information for and about insolvency practitioners”. Practitioners who do not have access to the Internet can obtain a copy of the Principles by telephoning 0207 291 6772.

General enquiries may be directed to IPU.Email@insolvency.gsi.gov.uk

6.   Civil Recovery Scheme – Expressions of Interest in Joining a National Civil Recovery Rota

Article Withdrawn December 2006.  Please see article 13

The Authorising Bodies, through the medium of the Joint Insolvency Committee, have been working towards adopting a standardised Insolvency Ethical Guide for all insolvency practitioners. The revised Guide is expected to be adopted by most of the Authorising Bodies on 1 January 2004, with others adopting it as soon as their internal procedures allow.

The changes have been made to achieve standardisation as Stage One of a two stage review of the Guide. Stage Two will consider more substantive changes and is being conducted initially by the Joint Insolvency Committee.

The current amendments are not substantive and should not affect the way in which insolvency practitioners conduct their business.

The standardised guide will be published on The Insolvency Service website.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772

8. Appointment by the Secretary of State under Section 137 and 296 of the Insolvency Act 1986 – additional guidance on joint appointments in Official Receiver (OR) rota cases

It has been noted that there is some uncertainty and inconsistency as to whether application should be made to the Secretary of State under sections 137 and 296 of the Insolvency Act 1986 for the joint appointment of two or more practitioners in OR rota cases.

The guidelines appearing at Chapter 3, Article 2 of Dear IP state, "In a few cases it may be desirable to appoint joint office holders". For example, a joint appointment might be necessary because of size, complexity or geographical location(s) of the insolvent business. Additionally, some firms favour the appointment of joint IPs for practical purposes. This can have a positive benefit to the case by allowing the appointment of local staff as joint office holder rather than the single appointment of a non-resident partner.

Consequently, applications for joint appointments may be made by ORs when requested by the creditors or where the circumstances of the case warrant it, or where there is unlikely to be a negative effect in terms of costs. Such a negative effect is unlikely to arise where the proposed joint appointees are from the same firm.

If you wish to be appointed jointly with another member of your firm as a matter of course in OR rota cases, it would be helpful if you could notify the relevant OR. When doing so and for the purpose of future appointments, please provide details of your joint appointee (if this is to be constant) and state whether acts done by the liquidator or trustee are to be done by all or any one or more of the office holders (see sections 231(2) and 292(3) of the Insolvency Act 1986).

Practitioners may also like to know that the Inland Revenue have indicated that they no longer wish to be consulted in every case where they are not the petitioner.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772

10. Regional Trustee and Liquidator Units

As you will no doubt be aware, over the last 18 months the Insolvency Service (the Service) has centralised the trustee/liquidator function that Official Receivers (ORs) carry out into regional units (details below).  Perhaps not surprisingly, these units are called Regional Trustee and Liquidator Units (RTLUs).  The purpose of the RTLUs is to take on all trustee and liquidator work which the OR in the local office would otherwise carry out.  With this in mind, and in line with the emphasis of the Enterprise Act 2002 to ensure that the best return possible is made to creditors, the Service will inevitably actively seek practitioner appointments in fewer asset realisation cases than we have up until now.  This will, in the main, affect cases with income payments orders or agreements (the OR has been retaining more of these cases for some time in any event) and straightforward realisations of assets such as cash at bank or interests in a bankrupt’s home with a willing purchaser.  In addition, it was previously the OR’s practice to offer batches of small credit balance cases; RTLUs will not seek the appointment of a practitioner in these cases but will distribute any balance to creditors.  Bankruptcy cases which are being dealt with by the Service’s Protracted Realisations Unit will not be affected.  Article 3 of Chapter 18 (Dear IP Issue 18) refers to these cases. 

If, in any case, creditors actively seek the appointment of a practitioner, the OR will, as now, do whatever is necessary to effect an appointment, either through a meeting or a Secretary of State appointment.  In such instances it is unlikely that the case will have been transferred to the RTLU.  However, there may be some cases that are initially referred to the RTLU in which it will be appropriate to seek a Secretary of State appointment of a practitioner.  The RTLUs will be using the local office rota system for the referral of such cases. 

General enquiries may be directed to oros@insolvency.gsi.gov.uk;   Telephone 020 7291 6824

The RTLUs are/will be located at the following OR’s offices: 

11. Appointment of an insolvency practitioner as trustee following a “no meeting decision”

Operational policy guidance has recently been issued to official receivers (ORs) dealing with requests from insolvency practitioners (IPs) who are seeking appointment as trustee following a “no meeting decision”.   

Since the introduction of its new financial regime in 2004 the Service has had a policy of retaining and dealing with straightforward realisation cases with the intention of increasing returns to creditors in those cases. In addition, further operational policy guidance was introduced in October 2005 in situations where insolvency practitioners are seeking appointments following the no meeting decision. In exercising his discretion the OR has an implicit duty to consider what is in the best interests of creditors when deciding to call a first meeting or when seeking a SoS appointment. This guidance relates only to bankruptcy cases. 

The aim of the additional guidance is to:

• Ensure that the wishes of creditors are taken into account.
• Ensure that assets are not unnecessarily diminished by the extra cost arising form the duplication of work by an IP in familiarising himself with cases in which there are no known or realistic prospects of additional asset realisations at the time of the request for appointment.
• Avoid the need for creditors to have to pay the cost of requisitioning a meeting where more than 25% of the creditors are in favour of an appointment.
• Avoid the need to canvass the views of creditors where less than 25% of the creditors are in favour of nominating an IP in place of the OR.

It applies to requests for the appointment of a particular IP after a notice of no meeting has been issued. 

Where the IP has identified additional recoveries that could be made or can show that they have access to specific information which could bring to light further assets the OR will consider acceding to the request for an SoS appointment. The OR will need to be satisfied that the potential assets amount to more than speculation by the practitioner.  Where the OR is not convinced that further assets will come to light and that the return to creditors could be at risk the following guidance will come into play: 

1. If the request comes in from less than 10% in value of the creditors the IP or creditor concerned will be asked to seek the support of additional creditors before the request can be considered further.

2. If the request is made by at least 10% but less than 25% of creditors (in value) the OR will decline but will advise that the creditors concerned can requisition a meeting of creditors, the costs to be borne by them. Where the level of support is below 25% it is arguable as to whether it is reasonable for the majority of creditors to bear the cost of a meeting.

3. If the request is made by at least 25% but less than 50% of the creditors (in value) the OR will write to all creditors providing an indication of the possible further asset recoveries which have been identified. Where the OR is already likely to make a distribution from the known assets the letter will also detail the potential implications on the distribution level if the IP fails to realise further assets.

4. If at any time more than 50% by value of the creditors express a wish for someone other than the OR to be appointed the nominated IP will be appointed. 

Where the creditor or the IP representing them has been asked to seek the support of additional creditors the OR will upon request provide a list of creditors. If a creditor is seeking to appoint an IP in order to carry out a detailed investigation this should not be at the potential expense of the other creditors whose interests the OR must seek to protect. It would be for the insolvency practitioner to convince the OR, or in the alternative other creditors, as to the benefits of any proposed  investigation so that they will be persuaded to support the IP’s nomination.  

Any IP who feels that their request has been declined unfairly should write to the appropriate regional director seeking a review of that decision. 

12. Guidelines for the Appointment by the Secretary of State under Sections 137 and 296 of the Insolvency Act 1986

NB article 2 of this chapter has now been withdrawn 

The Guidelines have been changed to enable official receivers to apply to the Secretary of State for the appointment from their rota of an insolvency practitioner as trustee in cases that are two or more years old and where the principle asset is an interest in a dwelling house which at the date of the bankruptcy order was the sole or principal residence of the bankrupt, their spouse/civil partner or former spouse/civil partner without first seeking the views of creditors. 

The change to the Guidelines has been made due to the special nature of these property interest cases, the limited time available to the insolvency practitioner trustee to realise the asset before it re-vests in the bankrupt and the difficulty in consulting creditors given the passage of time since the bankruptcy order.    

A copy of the revised Guidelines are published on the Insolvency Service website at www.insolvency.gov.uk/freedomofinformation/ipps/SoSguidelines.pdf 

Any enquiries regarding this article should be directed towards Insolvency Practitioner Policy Section, Area 5.6, 21 Bloomsbury Street, London WC1B 3QW  telephone: 020 7291 6765 email: IPPolicy.Section@insolvency.gsi.gov.uk

13. National Civil Recovery Rota – an Update

NB article 6 of this chapter has now been withdrawn

This rota was first introduced on 1 January 2004 for Official Receivers to use in cases in which there is potential for civil recovery action but which have no funding from creditors nor can an agreement for repayment be made with the relevant parties. Some 57 firms agreed to go on the rota and to date there have been a total of 23 appointments. 

As can be seen this rota has been rarely used and the Service feels that this may be for a number of factors, including: 

1. Where a creditor is aware of (or suspects) that there are potential civil recovery actions in a case, he/she will contact an insolvency practitioner at an early stage of the case and an appointment will be made.
   
2. As so many practitioner firms are able and willing to take these types of cases – often on a ‘no win no fee’ basis – ORs are able to make the necessary appointments using their local office rotas.
   
3. In the more straightforward case, ORs and/or RTLUs will take the action as trustee/liquidator and will realise the assets.

Despite the apparent lack of use of this rota, the Service continues to feel that it fulfils its purpose and acts as a rota of last resort. Consequently, we intend to keep it running. However, if any firm would like to be removed, or added to this rota, then please contact David Chapman/Linda Dellicolli on 020 7637 6397. 

General enquiries may be directed to oros@insolvency.gsi.gov.uk;   Telephone 020 7291 6824

14. Regional Trustee/Liquidator Units (RTLUs): an update

It is now nearly 5 years since RTLUs were created by The Insolvency Service (The Service). The purpose of this article is to give an updated position on the work that these offices undertake. 

Since the introduction of the RTLUs, in addition to the sort of cases in which an official receiver will act as trustee or liquidator of last resort (i.e. those cases in which either there are no assets, or the assets are such that their value is minimal or they are long-term), The Service is keeping more straightforward asset realisation cases, which will result in a distribution to creditors rather than looking to pass such cases out to an insolvency practitioner (IP). However, if creditors have sought the appointment of an IP, Chapter 17 of the Technical Manual sets out the procedure that should be followed. Access to the technical manual is available via the Insolvency Service website at http://www.insolvency.gov.uk/freedomofinformation/index.htm - look under “ 8) Policy and Technical Directorate” 

An RTLU is not a “closings unit” and as such will not usually deal with debit balance closings.  They have been created as specialist units to deal with cases in which: 

(a)   there is likely to be a distribution to creditors; or

(b)   in which the assets are not likely to attract an IP but will be time-consuming for the home OR to deal with.  

In the latter cases, the RTLU will deal with the following: 

a)     The realisation of an estate’s assets (regardless of value) in straightforward cases including (but not limited to) jointly and solely owned property where there is a willing purchaser, jointly and solely owned property where there is no willing purchaser but the value is insufficient to attract the appointment of an IP, property which is in negative equity, shares, life policies, collecting and monitoring payments under an income payments order/agreement (IPO/IPA), and book debts.

b)     Monitoring fast track voluntary arrangements (FTVAs), post creditor acceptance.  This will include processing applications for annulment in these cases, such applications being made without the need to attend at court.

c)      Realising or otherwise dealing with an estate’s interest in long- term assets regardless of value and complexity, where the case will not attract the appointment of an IP. For this purpose a long- term asset is one that cannot be realised quickly by the home office – e.g. a pension policy, a company pension scheme, long-term litigation issues and recovery actions.

d)     The administration of all cases it deals with to a conclusion, including the early discharge process.  

The RTLUs are located at the following offices:  

General enquiries may be directed to oros@insolvency.gsi.gov.uk;   Telephone 020 7291 6824