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Insolvency

Volume 463: debated on Tuesday 17 July 2007

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what steps are taken by the Official Receiver in creditor bankruptcy cases to assess the return to creditors that would be achieved through (a) the appointment of an insolvency practitioner as trustee in bankruptcy and (b) a fast track voluntary agreement. (150310)

In all bankruptcy cases the Official Receiver will identify, and establish valuations for, assets in the bankrupt's estate. Where there are sufficient assets to warrant the appointment of an insolvency practitioner as trustee, then a first meeting of creditors is called for creditors to vote for the insolvency practitioner of their choice who will have responsibility for the realisation of assets and distribution of funds to creditors.

In cases where there are no assets, or insufficient assets to attract an insolvency practitioner, the Official Receiver will not call a first meeting of creditors and will be appointed trustee.

Since 2002 the Insolvency Service has had a policy of retaining and dealing with cases where asset realisations are straightforward and creditors have not indicated they wish to appoint an insolvency practitioner. In most cases this provides a higher return to creditors.

All bankrupts are provided with the "Guide to Bankruptcy", which sets out the various alternatives to bankruptcy. If the facts of the case suggest that a fast track voluntary arrangement is appropriate, it will also be discussed with the bankrupt at interview. The key factor in determining whether an FTVA is appropriate is whether the creditors will receive a better return from the FTVA than they could obtain in the bankruptcy.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what steps are taken by the Official Receiver in creditor bankruptcy cases to ensure that the best return to the bankrupt's creditors is achieved. (150311)

In all bankruptcy cases the Official Receiver will identify what assets are comprised in the bankrupt's estate and will obtain third-party verification of the valuations given by the bankrupt.

Where there are sufficient assets to warrant the appointment of an insolvency practitioner as trustee, a first meeting of creditors is called, and the creditors vote for the insolvency practitioner of their choice who is responsible for the realisation of the assets and distribution of funds to creditors.

In cases where there are no or insufficient assets, the Official Receiver will not call a first meeting of creditors and will be appointed as trustee.

Since 2002 The Insolvency Service has had a policy of retaining and dealing with cases where asset realisations are straightforward and creditors have not expressed a wish to appoint an insolvency practitioner. In the majority of cases this provides a greater return for creditors.

In cases where the Official Receiver forms the view that an individual voluntary arrangement or fast track voluntary arrangement would produce a better return to creditors than a bankruptcy, he will inform the bankrupt of these options.