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Follow on Google News | Assets must not be hidden from creditors warns Insolvency ServiceA surge in potential bankrupts trying to put their assets out of the reach of their creditors has prompted a warning from The Insolvency Service.
By: Griffin and King The warning comes after the number of investigations into potential bankrupts who have tried to hide their assets from the Official Receiver has already risen to more than 200 this year, compared with just 28 in 2008-09. Bankrupts must disclose all assets, no matter how small, or they face a penalty which could include a custodial sentence, financial sanctions or having their period of bankruptcy restrictions increased by up to 15 years instead of the usual 12 months. In March this year a £50,000 confiscation order was made when an investigation by the Official Receiver found a young woman had hidden properties In July 2009, following an investigation into her finances, the bankrupt admitted she had failed to disclose that she owned two properties in Surrey and that she had obtained credit to the extent of £17,000 while bankrupt. Following the investigation criminal proceedings were brought against her which ended in court in March 2010 with a £50,000 confiscation order being made. Concluding the case the Judge agreed the bankrupt had abused the insolvency regime that was in place to assist her. Notes 1 What is the role of the Official Receiver? When a court has made an insolvency order (a personal bankruptcy against an individual or a winding-up order against a company) the Official Receiver, a civil servant of The insolvency Service with wide ranging statutory powers to obtain information, is responsible for collecting and protecting any assets for the benefit of creditors. When the Official Receiver thinks there is cause to do so they can also investigate, in the public interest, the conduct and financial affairs of the bankrupt for the period leading up to the insolvency order being made. 2 What are Bankruptcy Restrictions? must disclose their status to a credit provider if they wish to get credit of more than £500; who carry on business in a different name from the name in which they were made bankrupt, they must disclose to those they wish to do business with the name (or trading style) under which they were made bankrupt; may not act as the director of a company nor take part in its promotion, formation or management unless they have a court’s permission to do so; may not act as an insolvency practitioner, or as the receiver or manager of the property of a company on behalf of debenture holders; may not be a Member of Parliament in England or Wales. 3 What are Bankruptcy Restrictions Orders and Bankruptcy Restrictions Undertakings? The bankrupt may instead agree to a Bankruptcy Restrictions Undertaking (BRU) which has the same effect as an order, but will mean that the matter does not go to court. 4 The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) # # # Griffin and King are a leading firm of Insolvency Practitioners within the West Midlands with offices covering Dorset, Hampshire, Shropshire and Mid Wales. We are licensed by The Institute of Chartered Accountants in England & Wales. End
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