Administration

The Official Assignee

The Official Assignee’s office was transferred from the Courts Service to the Insolvency Service under the Personal Insolvency Act 2012.  The Official Assignee is a member of the staff of the Insolvency Service.  In relation to matters of general administration, he is subject to the general direction of the Director of the Insolvency Service. A Deputy Official Assignee may be appointed.

Subject to the general control of court, the Official Assignee is independent in the performance of his functions. The Official Assignee is an officer of the court.    The Official Assignee, when performing any function relating to the business of a court or acting under or pursuant to an order of a court, shall observe and obey such directions as are given to him by the court.

The Official Assignee may in writing delegate any of his functions to a specified member of the staff of the Insolvency Service. A person to whom functions of the Official Assignee have been delegated, shall, while the delegation remains in force, have all the powers of the Official Assignee in respect of the functions delegated to him.

The Bankruptcy Inspector and his assistants are obliged to follow the instructions of the Official Assignee, subject to the directions and control of the Court. It is the duty of the Bankruptcy Inspector or his assistants

  • to seize the property of the bankrupt pursuant to a warrant issued by the Court
  • to take an inventory of and report on the bankrupt’s property,
  • to take possession of the property of an arranging debtor pursuant to section 100, and to take an inventory of and report on the property,
  • to do such other things as may be directed by the Court or the Official Assignee.

Administration of Bankrupt’s Assets.

The bankrupt’s assets vest in the Official Assignee on adjudication of bankruptcy.  They are administered by the Official Assignee.  The Official Assignee is obliged to get in and realise the bankrupt’s assets. He must ascertain the debts and liabilities and distribute the net assets in accordance with law.

The Official Assignee is not liable by reason of any of the matters on which an adjudication was grounded being insufficient to support the adjudication, or in respect of his receipt of any property, provided he has not dealt with the property otherwise than as directed by the Court or as required

The creditors may (with court approval) choose to appoint a trustee in bankruptcy to administer the assets in place of the Official Assignee. The trustee in bankruptcy is usually a private insolvency practitioner. If a trustee is appointed, the assets pass to him, and he has much the same powers.


Post Adjudication

Once the adjudication / order of bankruptcy is made, the Official Assignee takes control of the affairs of the bankrupt.  The bankrupt must deliver him all books of account, papers and documents under his control relating to his affairs.  He must file a statement of affairs, give reasonable assistance to the Official Assignee and disclose all after-acquired property.

The bankrupt has a duty to disclose the existence and extent of his assets.  The Official Assignee has powers to elicit the relevant information from third parties. The Official Assignee may seize physical control of assets. The debtor must attend the statutory sitting and make full disclosure.

If a bankrupt appears to be about to leave the State, he can be  arrested.  A bankrupt may be summoned to Court and may be obliged to answer questions under oath in relation to his assets. All his books of accounts, papers, etc. must be produced.  A bankrupt may not refuse to answer questions, even where they would be incriminating. His answers will not be admissible in evidence in a criminal case against him. The process is inquisitorial with a view to ascertaining facts, rather than accusatory.


Bankrupt’s Duties to Give Information

After adjudication, a statutory sitting of creditors was formerly required.  The petitioner was required to advertise the sitting and publish notice of it in a newspaper. The debtor was summoned to attend and was obliged to lodge a statement of affairs in the prescribed form at least two days before the sitting. He was obliged to attend and answer questions. The procedure has been simplified following amendments which took effect in 2016.  There is no longer a statutory sitting of creditors.

The bankrupt must unless the Court otherwise directs, forthwith deliver up to the Official Assignee such books of account, other papers or records (including copies of such books of account, other papers or records held in electronic form)relating to his estate in his possession or control as the Official Assignee may from time to time request and disclose to him such of them as are in the possession or control of any other person;

He must deliver up possession of any part of his property which is divisible among his creditors under this Act, and which is for the time being in his possession or control, to the Official Assignee or any person authorised by the Court or otherwise under the provisions of this Act to take possession of it

He must, unless the Court otherwise directs, within the prescribed time file in the Central Office a statement of affairs in the prescribed form and deliver a copy thereof to the Official Assignee. He must give every reasonable assistance to the Official Assignee in the administration of the estate and disclose to the Official Assignee any after-acquired property.


Creditors Assignee

The creditors of a bankrupt may choose and appoint a creditor’s assignee to represent them in the administration of the estate. The creditors’ assignee acts with the official assignee in some limited respects.

The creditors may apply to the court for confirmation of the appointment not later than 90 days after the making of the adjudication order. All creditors shall be entitled to vote in such choice in person or by an agent authorised in writing in that behalf, and the choice and appointment shall be made by the major part in value of the creditors.

The Court may reject any person so chosen who appears to the Court unfit to be a creditors’ assignee or may remove a creditors’ assignee and in the event of a vacancy, however arising, a new choice and appointment may be made in like manner.


Trustee in Bankruptcy I

The Official Assignee is a government official. Three fifths in number and value of the creditors can resolve at a meeting of creditors to have the bankrupt’s assets wound up by a nominated trustee instead of the Official Assignee and a committee of inspection. An application must be made to court within 90 days of adjudication. The court may order that the bankruptcy trustee takes over from the Official Assignee.

The trustee is usually a private insolvency practitioner, but he is under the control of the court and has duties to it. The trustee must consent to act. The trustee need not have any qualification as such. Notice of the appointment of the trustee must be published .

Once appointed, an application is required to court, to vest the bankrupt’s assets in the trustee. The duly appointed trustee has most of the powers and functions of the Official Assignee.  He must have regard to directions given by the committee of inspection.  His duties are to administer the estate in the same manner as the Official Assignee.


Trustee in Bankruptcy II

Where on an application to it the Court makes an order approving the appointment of the trustee, it shall at the same time make provision for:

  • the remuneration of the trustee,
  • the making of regular reports by the trustee at subsequent sittings in relation to the winding up,
  • the procedure to be followed by the trustee in the lodgment of monies received by him,
  • the audit of the trustee’s accounts, and
  • such other matters as may be prescribed.

A trustee may be released with the consent of the court.  A meeting of the creditors must be informed of the application.  The assignee or creditors may oppose the release. A trustee may be removed by the court for cause.

The trustee must file accounts with the Official Assignee on completion of his trusteeship. It must be verified by an affidavit.  He must deliver all documents to the OA or to the new trustee.


Committee of Inspection

Where a trustee in bankruptcy is appointed, a committee of inspection is also appointed.  It consists of not more than five creditors who are entitled to vote at the creditor’s meetings.  Meetings may be summoned by any member or the trustee.  Notice of meetings must be given at least seven days in advance.

Members of the committee can be appointed or removed by meetings of the creditors generally.  If the committee refuses to convene a meeting, a creditor may apply to the court.

The committee of the creditors is entitled to certain information and to supervise certain aspects of the process.  The trustee’s records must be submitted to the committee of inspection.

In the winding up, the trustee shall, subject to the control of the court have regard to any directions given to him by the committee of inspection. The trustee is not bound by the committee’s directions but must have regard to them.


Power to Gather Assets

The Official Assignee is assignee of each bankrupt’s estate and act with the creditors’ assignee, if any. Except where otherwise directed by the Court, the property of every bankrupt, and the income and proceeds thereof, is possessed and received by the Official Assignee.

Every person shall, on request, deliver up to the Official Assignee all money or securities for money in such person’s possession or control which he is not by law entitled to retain as against the bankrupt or the Official Assignee.

The Official Assignee and trustee are obliged to gather in and protect the bankrupt’s assets.  Any person holding assets belonging to the bankrupt must deliver them to the assignee.  The Assignee or assignee may obtain a warrant to seize property and assets, in aid of the process of ascertaining assets.  This may entitle them to break into a house or place where assets may be which belong to the bankrupt.


Examination

The bankrupt persons or others who may have information in relation to the bankrupt’s assets may be summoned for examination on oath. The purpose is to ascertain the position in respect of prior dealings with the bankrupt’s assets and their current status and location.

Third parties may be summoned and required to produce documents under their control.  This extends to third parties who may have or may be suspected to have possession of assets, or documents relating to the bankrupt’s assets and to those who are capable of giving information in relation to the bankruptcy’s trade, business and affairs

The application for examination may be made by the Assignee, trustee, the bankrupt or any creditor. The initial application for examination may be made by a one-sided application, where there is a risk of frustration of the objective of the examination. The applicant must show to the court that the person sought to be examined has useful information.


Examination Issues

A person who refuses to attend for examination when summoned may be dealt with as if he was in contempt of court. The examination may be conducted by a judge or by the Master.  The examination may, at the discretion of the court, be held in private.  Witnesses may be legally represented. Questions may be put verbally or by way of written interrogatory. Witnesses who are summonsed must be tendered their reasonable expenses.

The purpose of the examinations is to ascertain facts relevant to the bankrupt’s assets.  The examination must seek to ascertain the assets.  It may examine whether there has been any fraudulent transfers or conveyances designed to reduce the bankrupt’s assets.  It may consider whether there has been any breach of bankruptcy legislation.

The court may hold the bankrupt in contempt of court if it finds the answers to be unsatisfactory, incomplete or evasive. The examination must be tailored to discovering facts and may not be undertaken for wider purposes.

Unlike other similar procedures, a witness may not refuse to answer a question on the grounds that it may incriminate him.  However, his answers are not admissible in any other proceedings, criminal or civil. Witnesses may claim privilege, where this is available under ordinary principles.

A person being examined may be committed to prison for failure to cooperate fully. The court may summons the person who has been committed, in to order to ascertain if he is willing to cooperate and “purge” his contempt. Committal will only be justified in exceptional circumstances.  The mere fact that the judge does not believe the witness is telling the truth is not generally sufficient.


Various Powers of Official Assignee (or Trustee) I

The Official Assignee’s powers are provided for by legislation. Most of his major powers are subject to the direction of the courts. He may apply to court for directions on a particular matter. A creditor or other interested party may apply also apply for the court’s directions in those matters.

There is no power to carry on the bankrupt’s business or trade.  However, a receiver may be appointed to do this by the court, subject to such conditions as may be applied.

The Official Assignee may undertake litigation or arbitration in order to fulfil his obligations.  This may be done either where the bankrupt is a potential claimant or a defendant in proceedings.


Various Powers of Official Assignee (or Trustee) II

The Official Assignee may continue, bring or defend legal proceedings relating to the bankrupt’s assets. The Official Assignee is entitled to an indemnity out of the bankrupt’s assets in respect of costs and expenses incurred by him in good faith.

There are powers to enter compromises or arrangements of disputes, on the bankrupt’s behalf. The OA or trustee may apply to the court for directions where there are special difficulties or issues which arise.

A mortgage or charge may be given over the bankrupt’s assets in order to raise funds for the purpose of the bankruptcy.

The Official Assignee and trustee may retain the services of appropriate professionals as necessary.  Where the costs exceed a certain threshold, court consent is required.


Power of Sale

The Official Assignee has the power to sell and realise the bankrupt’s assets.  This may be done by auction or private contract.  Lands may be sold as a whole or in lots.  There is a duty to obtain the best price, reasonably obtainable in the circumstances.

The mode of sale is determined by the assignee or trustee. In common with other cases where fiduciary obligations apply, the trustee and assignee may not purchase themselves. The court may give directions in relation to the sale, which may override the assignee’s discretion.

In realising assets, the assignee must account for tax in a normal way.  As the role of their insolvency officers, they are accessible for the tax of the underlying bankrupt in respect of post-bankruptcy matters. Pre-bankruptcy tax liabilities must be proved in the normal way.

The Court’s approval is required for the sale of the family home.  See the separate section in this regard.

An application may be made to Court to sell mortgaged property.  All mortgagees and persons having rights to the property are entitled to be heard in the application.  The court may make an order confirming a third party’s interest in the property. An order for accounts and enquiries may be made.  The court may direct the manner of sale.

The court may make an order directing that a buyer be granted possession of the property in order to give full effect to the sale.  A buyer is protected notwithstanding certain failures to follow procedure.


Payments and Distributions

Payments from the bankrupt’s assets are by way of one or more dividends.  Once sufficient monies have been recovered to cover costs and pay dividends, they should be paid to the creditors at an early date.

The matter is returned to court by way of a petition, which is to be advertised. The court sitting is presented with details of creditor’s proofs, accounts, realisations and proposed dividend.  The court may then make an order in relation to the distribution.

The papers filed and presented to court are available for inspection.  Unclaimed distributions are paid into a special account. Any surplus after payment of all creditors and costs belongs to the bankrupt.


Records and Accounts

Assignees and trustees must keep records of their receipts and payments. The books and records must show debts due to the bankrupt’s estate and amounts received.  They must set out in detail, each of the creditor’s claims, together with details of receipts and payments.  They must contain a list of all assets as well as particulars of papers, valuable, books, et cetera delivered to him.

A separate account must be maintained for the bankrupt estate.  Payments received and sums paid must be lodged and paid from the account.  Payments from the account must be authorised by the assignee or trustee.

A trustee must keep the same books and records.  They must also include minutes of the Committee’s meetings, minutes of the court’s sitting and books of account of receipts and payments.  The trustee must retain the files in relation to these matters.  They must be available at the committee of inspection meetings and must be available for the creditors at a reasonable time.


Insolvency Service / Examiner’s Office Returns

Every  six months, the assignee must lodge with the Examiners office, which is now part of the  Insolvency Service, a statement of amounts received and paid.  The Examiner may order production of the assignee’s books and records for this purpose.

A trustee’s records must be submitted to the committee of inspection for audit (review / verification) every three months.  The committee may call upon the trustee to produce such records as it requires, in order to vouch for the assets.  The committee must certify the so-called “estate book”.  Once certified, it must be filed with the Examiner’s office.

All money and securities received by the Official Assignee, being part of a bankrupt’s estate, is forthwith lodged by him in an account in the Central Bank of Ireland or a bank authorised to carry on business in the State and is kept there to the credit of the Official Assignee subject to the provisions of the Bankruptcy Act and the directions of the Court. The Minister may, following consultation with the Insolvency Service, by regulations make provision for the manner in which the Official Assignee shall maintain accounts and for matters relating to the keeping of such accounts

The Examiner may enquire into the proprietary of returns made by the Official Assignee and trustees in bankruptcy. He may any report the matter to the court.  The court may summons the trustee and make orders as it may think fit.

The Examiner must enquire into any case where it is alleged that the trustee is not performing his functions properly.  If the Examiner is unsatisfied with the explanations given, a report must be made to the court.  The court may convene a hearing, and the trustee may be removed, or the court may make such other order as it sees fit.


General Bankruptcy Offences I

If a bankrupt does any of the following, he is guilty of an offence

  • fails to disclose to the Court, or to the Official Assignee or to such person or persons as the Court from time to time directs, all his property and how and to whom and for what consideration and when he disposed of any part thereof, except such part as has been disposed of in the ordinary way of his trade (if any) or laid out in the ordinary expense of his family, or
  • fails to deliver up to the Official Assignee, or as he or the Court directs, all such part of his property as is in his possession or under his control, and which he is required by law to deliver up, or
  •  fails to deliver up to the Official Assignee, or as he or the Court directs, all books, papers and records (including copies of such books, papers and records held in electronic form) in his possession or under his control relating to his estate and which he is required by law to deliver up, or
  • conceals any part of his property to the value of €650 or upwards, or conceals any debt due to or from him, or
  • fraudulently removes any part of his property to the value of €650 or upwards, or
  • fails to file or deliver a statement of affairs as required or makes any material omission in any statement relating to his affairs, or
  • knowing or believing that a false debt has been proved by any person under the bankruptcy or arrangement, fails for the period of a month to inform the Official Assignee thereof, or

General Bankruptcy Offences II

If a bankrupt does any of the following, he is guilty of an offence

  • prevents the production of any book, paper or record (including copies of any book, paper or record held in electronic form) affecting or relating to his estate, or
  • conceals, destroys, mutilates or falsifies or is privy to the concealment, destruction, mutilation or falsification of any book, paper or record including any such book, paper or record held in electronic form) affecting or relating to his estate, or
  • makes or is privy to the making of any false entry in any book, paper or record (including any such book, paper or record held in electronic form) affecting or relating to the estate, or
  • fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making any omission in, any document affecting or relating to his estate, or
  • attempts to account for any part of his property by fictitious losses or expenses, or
  • obtains, by any fraud or false representation, any property on credit, or
  • obtains, under the false pretence of carrying on business and, if a trader, of dealing in the ordinary way of his trade, any property on credit, or
  • pawns, pledges or disposes of any property which he has obtained on credit, unless, in the case of a trader, such pawning, pledging or disposing is in the ordinary way of his trade, or
  • is guilty of any fraud or false representation for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or the bankruptcy or arrangement;

Offences Issues

In the case of the first mentioned offence an act done within 3 years next before he is adjudicated or granted an order for protection, is presumed until the contrary is proved to be done with intent to defraud his creditors.

It is defence in some of the above cases if the accused proves that he had no intent to defraud or if he proves that he had no intent to conceal the state of his affairs or to defeat the law.A person other than a bankrupt who, with intent to defraud his creditors, does certain of the above acts is guilty of an offence

Where any person pawns, pledges or disposes of any property in circumstances which amount to an offence every person who takes in pawn or pledge or otherwise receives the property knowing it to be pawned, pledged or disposed of in such circumstances as aforesaid shall also be guilty of an offence and shall be liable to be punished in the same way as if he had been guilty of such an offence


Pre-Bankruptcy Offences

If any person with intent to defraud his creditors leaves the State and takes with him or attempts or makes preparation to leave the State and take with him, any part of his property to the amount of €650 or upwards, he shall be guilty of an offence.

If any creditor of a bankrupt or an arranging debtor obtains or accepts any property from the bankrupt or arranging debtor or any other person as an inducement for forbearing to oppose or for accepting any offer of composition or proposal or any modification thereof made by or on behalf of the bankrupt or arranging debtor, the claim of the creditor shall be void and irrecoverable and the creditor and such other person (if any) shall each be guilty of an offence.


Offences in Course of Bankruptcy

If any creditor, or any person claiming to be a creditor, in any bankruptcy or arrangement with intent to defraud makes any false claim or any proof, declaration or statement of account which is untrue in any material particular, he shall be guilty of an offence.

A bankrupt who fails to disclose to the Official Assignee any after-acquired property shall be guilty of an offence.Any person who knowingly and wilfully resists, hinders or obstructs the Bankruptcy Inspector or any of his assistants or any other person in the execution of his duties under this Act shall be guilty of an offence.

A bankrupt or an arranging debtor who  either alone or jointly with any other person obtains credit to the extent of €650 or upwards from any person without informing that person that he is a bankrupt or an arranging debtor, orengages in any trade or business under a name other than that under which he was adjudicated bankrupt or granted protection without disclosing to all persons with whom he enters into any business transactions the name under which he was so adjudicated or granted protection,  is guilty of an offence.

Where a bankrupt or arranging debtor has been guilty of any offence, he shall not be exempt from being proceeded against for the offence by reason that his bankruptcy has been discharged or annulled or that his proposal has been carried into effect.


Penalties

Every person guilty of an offence under the Bankruptcy Act ia  liable—

  • on summary conviction, to a fine not exceeding £500 or, at the discretion of the Court, to imprisonment for a term not exceeding twelve months or to both the fine and the imprisonment, or
  • on conviction on indictment, to a fine not exceeding £1,000 or, at the discretion of the Court, to imprisonment for a term not exceeding five years or to both the fine and the imprisonment.

The above amounts are increased to reflect inflation since 1988 under the Fines Act.


References and Sources

Irish Books

Burke & Comyn Personal Insolvency Law               2014

Bracken Practioner’s Personal Insolvency Handbook 2013

Law Society (Wright)       Insolvency Law                  2009

Sanfey & Holohan            Bankruptcy Law & Practice2nd Ed             2010

Farry, Holohan  Consolidated Bankruptcy & Personal Insolvency Legislation2013

Forde, Kennedy & Simms              Company Insolvency                      2015

Forde & Simms Bankruptcy Law 2nd Ed 2009

UK Books

Insolvency Law and Practice (Report of the review committee chaired by Sir Kenneth Cork CBE, 1982, Cmnd 8558) (the Cork report)

V Finch, Corporate Insolvency Law: Perspectives and Principles 3rd Ed 2017

RM Goode, Principles of Corporate Insolvency Law (4th Ed, 2011)

A Keay and P Walton, Insolvency law: corporate and personal (4rd Ed, 2017)

Marsh Bankruptcy Insolvency and the Law 2016

WW McBryde, Bankruptcy 2nd Ed, 1995

Butterworths Insolvency Law Handbook 14th Ed 2012

Core Statutes on Insolvency Law and Corporate Rescue (annual editions)

Legislation

Bankruptcy Act 1988

Bankruptcy (Amendment) Act 2015

Personal Insolvency Act 2012

Personal Insolvency (Amendment) Act 2015

Bankruptcy Act 1988 (Commencement) Order 1988, S.I. No. 348 of 1988

Bankruptcy Act, 1988 (Alteration of Monetary Limits) Order 2001, S.I. No. 595 of 2001

Bankruptcy Act 1988 (Official Assignee Accounts and Related Matters) Regulations 2013, S.I. No. 464 of 2013

Bankruptcy (Amendment) Act 2015 (Commencement) Order2016, S.I. No. 34 of 2016

Rules of the Superior Courts (Bankruptcy) 2012, S.I. No. 120 of 2012

Rules of the Superior Courts (Bankruptcy) 2013, S.I. No. 461 of 2013

Rules of the Superior Courts (Bankruptcy) 2016, S.I. No. 232 of 2016

Bankruptcy (Amendment) Act 2015 (Commencement) (No. 2) Order 2016, S.I. No. 253 of 2016