What Does An Official Receiver Do In Insolvency Procedures?August 30, 2021
If you’re looking for information about what an official receiver does in insolvency procedures, we’ve put together this short summary.
We'll also explain what the official receiver checks during an interview and go into detail about official receiver fees.
You may also find our article about receivership and administration helpful.
Before we explore the role of an official receiver in insolvency procedures, let’s first clarify what they are.
What is an official receiver?
An official receiver represents the Insolvency Service, with their role established by the Bankruptcy Act 1883 to work with insolvent companies.
Amongst the duties of an official receiver are:
- The collection and protection of assets for creditors
- Identifying the reasons for insolvency
- Acting as a trustee or liquidator if a private sector insolvency practitioner has not been appointed
An official receiver is answerable to the courts for carrying out their orders.
The government website explains in detail how to contact a local official receiver by phone or email.
How much are the official receiver fees?
A suite of changes were made to official receiver fees in 2016, with new costs including:
- General official receiver fees: £6,000
- Trustee / liquidator fees: 15% of the value of assets realised by the official receiver
- Income payments agreement (IPA) / income payments order (IPO) set-up fees: £150
- Refunding a dismissed / withdrawn petition fees: £50
The general official receiver fees are fixed and replace the previous secretary of state fee - this was payable as a percentage of assets and had a maximum charge capped at a sum of £80,000.
Where no private sector insolvency practitioner has been appointed, the official receiver acts as a trustee or liquidator and there is no maximum charge cap on the 15% fee of assets.
The IPA or IPO fee (in a bankruptcy) is a one-off and only charged if the official receiver needs to arrange and set up one.
Lastly, when the official receiver is required to issue a refund to the petitioner, due to the dismissal or withdrawal of the petition, the final fee covers their administration work.
What does an official receiver do in insolvency procedures?
Once an insolvent company has had its hand forced by a creditor (most likely) or any other person, and the court makes a winding up order, the first official receiver compulsory liquidation stage begins.
This is a similar process in a personal bankruptcy where no company is involved.
An official receiver usually handles the early steps of the procedure and should write to you (as a bankrupt person or a Director of a company in compulsory liquidation) within two weeks from the date the winding up (or for individuals, bankruptcy) order was made.
Once approved then you would attend an official receiver interview, either by telephone or in person.
During the interview, they would ask you to fill in a questionnaire or check an already complete one, as well as take important documents - more on this shortly.
They could also handle any queries or ask you to provide further information, potentially at another appointment. Following the interview, the official receiver sends a report to the creditors.
An official receiver, if no insolvency practitioner has been appointed, then takes control of the assets to pay creditors.
The official receiver also has the bankruptcy or compulsory liquidation listed in the Gazette.
What does the official receiver check?
If you want to know, what does the official receiver check... in short, it would be financial records and paperwork including a full list of assets. This could include:
- Company accounts
- Financial statements
- Bank records
- Hire purchase agreements
- Credit card statements
- Letters and any other relevant paperwork
- Completed questionnaire (if asked to do so)
Failing to cooperate with an official receiver (in a compulsory company liquidation) could ultimately lead to a director becoming disqualified from directorship for up to 15 years, under the terms of the Company Directors Disqualification Act 1986.
It’s worth bearing in mind that an official receiver does not give company debt advice - if you need this, we would always recommend seeking guidance from highly qualified insolvency experts.
If you have any further queries around what an official receiver does in insolvency procedures, what does the official receiver check, or anything regarding company bankruptcy, please get in touch with us.