If you are a creditor of an insolvent company or a bankruptcy, Oliver Elliot can help you address your concerns arising from the insolvency and explain how Trustee In Bankruptcy investigation powers can help.
Insolvency Practitioner Investigation Powers
What are the Trustee In Bankruptcy’s investigation powers?
Trustee In Bankruptcy investigation powers are as follows:
Section 311 of the Insolvency Act 1986 enables the Trustee in a bankruptcy case to acquire control of the bankrupt’s property such as his books and records, including documents that are privileged. Section 311, 312, 333 and 366 of the Insolvency Act 1986 are all interlinked.
The Section has mandatory characteristics because it would be unusual for the Insolvency Practitioner to be unable to take into his or her possession all and any relevant property of the Bankrupt.
The Section applies in a bankruptcy case.
Section 311 of the Insolvency Act 1986: Acquisition by trustee of control
(1)The trustee shall take possession of all books, papers and other records which relate to the bankrupt’s estate or affairs and which belong to him or are in his possession or under his control (including any which would be privileged from disclosure in any proceedings).
(2)In relation to, and for the purpose of acquiring or retaining possession of, the bankrupt’s estate, the trustee is in the same position as if her were a receiver of property appointed by the High Court; and the court may, on his application, enforce such acquisition or retention accordingly.
(3)Where any part of the bankrupt’s estate consists of stock or shares in a company, shares in a ship or any other property transferable in the books of a company, office or person, the trustee may exercise the right to transfer the property to the same extent as the bankrupt might have exercised it if he had not become bankrupt.
(4)Where any part of the estate consists of things in action, they are deemed to have been assigned to the trustee; but notice of the deemed assignment need not be given except in so far as it is necessary, in a case where the deemed assignment is from the bankrupt himself for protecting the priority of the trustee.
(5)Where any goods comprised in the estate are held by any person by way of pledge, pawn or other security and no notice has been served in respect of those goods by the official receiver under subsection (5) of section 285 (restriction on realising security), the trustee may serve such a notice in respect of the goods; and whether or not a notice has been served under this subsection or that subsection, the trustee may, if he thinks fit, exercise the bankrupt’s right of redemption in respect of any such goods.
(6)A notice served by the trustee under subsection (5) has the same effect as a notice served by the official receiver under section 285(5).
Section 312 of the Insolvency Act 1986 is the Section that enables an Insolvency Practitioner to demand delivery up of property belonging to the Bankrupt when acting as Trustee in a bankruptcy case.
Sections 311, 312, 333 and 366 of the Insolvency Act 1986 are all interlinked.
Section 312 of the Insolvency Act 1986 can be used by the Insolvency Practitioner to demand property from anyone having the Bankrupt’s assets and or documents such as books, papers and records which would be relevant to the Bankrupt’s financial affairs. The Section has mandatory characteristics because it would be unusual for the Insolvency Practitioner to be unable to take into his or her possession all and any relevant property of the Bankrupt.
Obligation to surrender control to trustee.
(1)The bankrupt shall deliver up to the trustee possession of any property, books, papers or other records of which he has possession or control and of which the trustee is required to take possession.
This is without prejudice to the general duties of the bankrupt under section 333 in this Chapter.
(2)If any of the following is in possession of any property, books, papers or other records of which the trustee is required to take possession, namely—
(a)the official receiver,
(b)a person who has ceased to be trustee of the bankrupt’s estate, or
(c)a person who has been the supervisor of a voluntary arrangement approved in relation to the bankrupt under Part VIII,
the official receiver or, as the case may be, that person shall deliver up possession of the property, books, papers or records to the trustee.
(3)Any banker or agent of the bankrupt or any other person who holds any property to the account of, or for, the bankrupt shall pay or deliver to the trustee all property in his possession or under his control which forms part of the bankrupt’s estate and which he is not by law entitled to retain as against the bankrupt or trustee.
(4)If any person without reasonable excuse fails to comply with any obligation imposed by this section, he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).
Section 333 of the Insolvency Act 1986 is the Section that enables an Insolvency Practitioner to obtain information from the Bankrupt whose estate is being managed by creating a duty to cooperate. Sections 311, 312, 333 and 366 of the Insolvency Act 1986 are all interlinked.
Section 333 of the Insolvency Act 1986 can be used to obtain information from the Bankrupt relevant to his or her financial affairs that the Insolvency Practitioner reasonably requires. The Section is mandatory; the Bankrupt has a duty to cooperate with the Insolvency Practitioner who is acting as the Trustee in Bankruptcy. A refusal by a Bankrupt to cooperate with his or her Trustee can lead to an arrest being made and even imprisonment.
The Section survives the bankrupt’s discharge from bankruptcy and continues to apply so long as the estate is open and the subject of investigations.
Duties of bankrupt in relation to trustee.
(1)The bankrupt shall—
(a)give to the trustee such information as to his affairs,
(b)attend on the trustee at such times, and
(c)do all such other things,
as the trustee may for the purposes of carrying out his functions under any of this Group of Parts reasonably require.
(2)Where at any time after the commencement of the bankruptcy any property is acquired by, or devolves upon, the bankrupt or there is an increase of the bankrupt’s income, the bankrupt shall, within the prescribed period, give the trustee notice of the property or, as the case may be, of the increase.
(3)Subsection (1) applies to a bankrupt after his discharge.
(4)If the bankrupt without reasonable excuse fails to comply with any obligation imposed by this section, he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).
Section 366 of the Insolvency Act 1986 is the enforcement section that enables an Insolvency Practitioner to obtain information in bankruptcy cases. Sections 311, 312, 333 and 366 of the Insolvency Act 1986 are all interlinked.
Section 336 of the Insolvency Act 1986 can be used to obtain information from anyone having information relevant to the Bankrupt’s financial affairs. It cannot however be used by the Insolvency Practitioner oppressively. It is used to enable a Trustee in Bankruptcy to reconstitute and reconstruct knowledge and or investigate the Bankrupt’s former financial affairs and dealings.
Inquiry into bankrupt’s dealings and property.
(1)At any time after a bankruptcy order has been made the court may, on the application of the official receiver or the trustee of the bankrupt’s estate, summon to appear before it—
(a)the bankrupt or the bankrupt’s spouse or former spouse or civil partner or former civil partner,
(b)any person known or believed to have any property comprised in the bankrupt’s estate in his possession or to be indebted to the bankrupt,
(c)any person appearing to the court to be able to give information concerning the bankrupt or the bankrupt’s dealings, affairs or property.
The court may require any such person as is mentioned in paragraph (b) or (c) to submit a witness statement verified by a statement of truth to the court containing an account of his dealings with the bankrupt or to produce any documents in his possession or under his control relating to the bankrupt or the bankrupt’s dealings, affairs or property.
(2)Without prejudice to section 364, the following applies in a case where—
(a)a person without reasonable excuse fails to appear before the court when he is summoned to do so under this section, or
(b)there are reasonable grounds for believing that a person has absconded, or is about to abscond, with a view to avoiding his appearance before the court under this section.
(3)The court may, for the purpose of bringing that person and anything in his possession before the court, cause a warrant to be issued to a constable or prescribed officer of the court—
(a)for the arrest of that person, and
(b)for the seizure of any books, papers, records, money or goods in that person’s possession.
(4)The court may authorise a person arrested under such a warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until that person is brought before the court under the warrant or until such other times as the court may order.
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