Source: https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch1-12/Chapter9/part4/part_4.htm
Timestamp: 2019-05-24 13:04:23
Document Index: 330367911

Matched Legal Cases: ['art 2', 'arts 2', 'art 2', 'art 7', 'art 3', 'art 5']

CREDITOR TAKING CONTROL OF GOODS AND INSOLVENCY – GENERAL BACKGROUND AND INITIAL ACTION TO TAKE
9.71 Taking control of goods and insolvency – general
There are provisions in the Act which allow a creditor with the right to take control of goods (see Part 2), including a landlord under a CRAR (see paragraph 9.22), to achieve limited priority over other creditors of the insolvent. These rights differ depending on the type of insolvency and the grounds under which the creditor has power to take action (see paragraph 9.78).
9.72 Initial action by the official receiver – establish if goods taken control of
The official receiver should at an early stage in the insolvency establish from the directors, bankrupt or other relevant third party (for example employees or professional advisors) whether any of the insolvent’s property has been taken control of.
9.73 Can the controlled goods be claimed for the estate?
The official receiver needs to consider whether goods taken by a creditor in respect of the execution of a judgment or a CRAR (see paragraph 9.22) may be claimed for the benefit of the bankrupt’s estate. The official receiver should consider, in particular, whether the CRAR process or execution (as the case may be) has been followed correctly. In this, the official receiver may consider the information in Parts 2 and 3, but is entitled to assume that the process has been correctly followed unless information to the contrary is made available.
The official receiver should also consider when the goods were taken, whether the sale of the goods has been completed and whether (in company cases) the goods were subject to a charge.
To assist in making this decision, the official receiver should seek to obtain the information in paragraph 9.74 before considering the guidance in paragraph 9.78.
9.74 Obtain details of the goods taken control of
Once the official receiver has established that goods have been taken control of (see paragraphs 9.72), steps should be taken to ascertain from the insolvent or other third party, the following information [note 1]:
The date that goods were taken control of;
That name and address of the creditor;
The name and address of the enforcement agent (see paragraph 9.10) who dealt with the process;
Details of the goods taken control of and, if removed, the location of those goods, and
A copy of the notice of taking control of goods (see paragraph 9.32) issued by the enforcement agent.
Whether the goods have been sold and, if so, the date of the sale.
9.75 Inform interested parties of the making of the order – county court
In respect of County Court warrants of control, written notification of the making of an insolvency order and the appointment of the official receiver [note 2] should immediately be sent or given to the relevant county court district. Evidence of the notice should be retained on the electronic case file to avoid difficulty if the proceeds of any sale are subsequently paid away (see paragraphs 9.91, 9.106 and 9.107).
A judgment creditor may obtain warrants in more than county to recover the judgment debt. The official receiver should serve notice on the county court district in each county in which the insolvent is believed to have held or occupied property or traded.
9.76 Inform interested parties of the making of the order – High Court Enforcement Officer
As outlined in paragraph 9.16, any High Court Enforcement Officer (HCEO) can execute a writ of control in any county. If the official receiver is not aware of which HCEO has been appointed, it will not be possible to issue the standard letter [note 3].
A directory of HCEOs can be found on the High Court Enforcement Officer's Association website, at www.hceoa.org.uk.
In the event that the official receiver has information that a writ of control has been issued in relation to a debt, but is unaware of which HCEO has been appointed he/she may send the standard letter [note 4] to the creditor asking them to provide details of the HCEO appointed. The standard letter of notification [note 5] can then be issued to the HCEO. The notice should be issued electronically, where possible, but if it is issued by post it should be sent by recorded delivery [note 6] [note 7].
9.76a Inform interested parties of the making of the order – private bailiff acting as enforcement agent
The official receiver should serve notice of the insolvency on any private bailiff (see paragraph 9.20) acting as an enforcement agent (see paragraph 9.10) appointed by a creditor to take control of goods.
9.77 Notice to enforcement agent where sale is imminent
Where property of the insolvent is about to be sold by the enforcement agent charged with taking control of the goods, the official receiver must take urgent action to ensure that the agent is aware of the insolvency order (see paragraphs 9.75 to 9.76). If necessary, this may mean that the official receiver has to serve notice by hand [note 8] [note 9].
Once notice has been served, the official receiver may allow the sale to proceed (see paragraphs 9.96 and 9.117).
Service of the notice upon an agent of the enforcement agent or on an auctioneer instructed by the officer will not be sufficient notice to stop the sale [note 10] [note 11].
9.78 Effectiveness of taking control of goods process in insolvency
The effectiveness of the taking control of goods process in insolvency depends on when, and following which legal route, the process was carried out:
Execution (see paragraph 9.12) before the commencement of insolvency (see paragraphs 9.86 to 9.88).
Execution after the commencement of winding up (presentation of winding-up petition) (see paragraphs 9.93).
Execution after the making of a bankruptcy order (see paragraphs 9.94).
Qualifying creditor (see paragraph 9.103) carrying out process (see paragraph 9.22) more than three months before the order (see paragraph 9.105).
Qualifying creditor carrying out process within the three months before the making of the order (see paragraphs 9.108).
Qualifying creditor carrying out process after the commencement of winding-up (presentation of winding-up petition) (see paragraph 9.106).
Qualifying creditor carrying out process after the making of the bankruptcy order (see paragraphs 9.109).
9.79 Official receiver to move goods under threat of control
For the reasons given in paragraphs 9.100 and 9.109, it may be prudent for the official receiver to remove to storage goods at the insolvent’s premises that are under threat of control, subject to cost/benefit considerations.
9.80 Official receiver has no duty to inform creditor of intention to move goods
It is not necessary for the official receiver to give a creditor with a right to take control of goods any notice of his/her intention to remove or dispose of the insolvent’s goods. Notice should however be given where the creditor has requested to be kept informed, or the official receiver intends to dispose of the goods in situ (see paragraphs 31.0.42 to 31.0.45).
9.81 Goods taken control of by HMRC
Subject to the restrictions in Part 2, HMRC has the right to take control of a bankrupt’s goods at any time [note 12] [note 13] (even after the making of the order – see paragraph 9.82).
Guidance regarding HMRC’s power to take control of goods, generally, can be found in paragraph 9.24.
9.82 Goods taken control of by HMRC after bankruptcy order
HMRC have agreed with The Service that where they have taken control of goods after the date of the bankruptcy order, the goods or the related proceeds of sale, will be passed to the official receiver upon notification of the bankruptcy order and receipt of a request for the goods or proceeds of sale.
HMRC have also agreed that they will not exercise their right to take control of goods after they become aware of the bankruptcy order unless other creditors entitled to take control of goods have, to the detriment of HMRC, taken control of goods or if the debtor continues to trade.
9.83 Charged goods taken control of (companies only)
Where there is a fixed charge over a company’s assets which have been taken control of, the official receiver should inform the chargeholder of the action taken against the goods and take no further action in the matter (provided there is no doubt as to the validity of the charge – see Part 7).
9.84 Receiver/administrative receiver appointed
Where a receiver or administrative receiver has been appointed (see Chapter 56.2), the question of taking control of goods should be left to the administrative receiver to resolve, provided the charge under which the appointment is made covers the controlled/threatened goods.
[Back to Part 3 – Creditor taking control of goods – process] [On to Part 5 – Insolvency and the execution of a judgment by a creditor]