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If you’re involved in a bankruptcy or winding up process, you will hear the term ‘Official Receiver’.

Below, we define this important role and explain how they work.

Official Receiver: Definition

Official Receivers act as officers of the government agency, the Insolvency Service. They are appointed when a company is put into compulsory liquidation – as when petitioned by a creditor and then wound up by the court – or an individual is declared bankrupt. The service is provided around the UK from local offices of the Insolvency Service. an executive agency of the Department for Business, Energy and Industrial Strategy (BEIS). 

Responsibilities

The Official Receiver – and their team of staff – will manage at least the first stage of insolvencies – sometimes known as the provisional stage. There are a number of duties, which include:       

  • To collect and protect assets for creditors
  • To take control of the company’s affairs
  • To investigate – and report on – the reasons for the insolvency 
  • To keep creditors and shareholders updated

Official Receiver vs Liquidator

The Official Receiver acts as liquidator where there is no private sector insolvency practitioner appointed.

While the Official Receiver will be involved initially with a liquidation, when it comes to the realisation of assets, a private sector insolvency practitioner will often be appointed for this role, subject to the approval of creditors. In the case of large or highly complex cases, the Official Receiver may also bring in additional experts to assist with the liquidation. 

Investigation into the Conduct of Directors

The Official Receiver will  interview the company’s directors and go through the financial records. They may also make background enquiries with other parties, such as banks and the company’s accountants. The Official Receiver’s reports on cases are not publicly available.

Directors’ Duties

Directors have a duty to comply with requests from the Official Receiver to provide information about the company’s financial affairs and management and also to attend interviews when asked. The Official Receiver is not able to provide directors with legal or financial advice.

Initial meetings will usually be held in person and can last several hours. Questions will be around what assets are held, debts and the reasons for why insolvency has occurred. Following this, the Official Receiver will write to directors, setting out what is required from them.

It is essential that directors cooperate with the Official Receiver’s office and if not, they could be summoned to court to answer questions or even arrested. Furthermore, directors who do not cooperate could be sanctioned by being disqualified from future company management roles for a period of from two to 15 years.

What Information Will the Official Receiver Want From Directors?

Examples include financial records and key documents such as bank and credit card statements and hire purchase agreements. These may well be retained by the Official Receiver for investigation.

How Soon Will Directors Hear From the Official Receiver? 

Employees from the local office of the Official Receiver will generally be in contact within two working days of receiving the insolvency order, if not before. Directors will usually be asked to attend an interview within 10 days of the order.

Once investigations are underway and sufficient information is collated, the Official Receiver will set out details of the assets and debts in a report for creditors. This will normally be issued within eight weeks of the insolvency order being granted. A meeting of creditors will usually be held within 12 weeks of the winding up order

Does the Official Receiver Investigate Wrongdoing?

This is part of the Official Receiver’s statutory remit. If fraud or other wrongdoing appears likely, the Official Receive will report this to the Insolvency Service’s Investigations and Enforcement Services. The Official Receiver has wide ranging powers to obtain information that will support their investigations and can also examine people in court if necessary. Where there may be criminality, the Official Receiver may also deal with other agencies such as local police or the Serious Fraud Office.