Official Receiver

Definition

An Official Receiver (OR) is an officer appointed by the Secretary of State for Business, Innovation, and Skills to manage bankruptcy and winding-up cases. The High Court and each county court with jurisdiction over insolvency matters have an official receiver in place. Official receivers typically act as liquidators for companies ordered to wind up by the court. Deputy official receivers can also be appointed when necessary.

Key Responsibilities

Administering the estate of the bankrupt individual or insolvent company.
Acting as the interim trustee or liquidator until creditors appoint a permanent trustee or liquidator.
Investigating the affairs of the bankrupt or insolvent entity.
Reporting any misconduct by the bankrupt or company directors to the appropriate authorities.

Examples

Bankruptcy Case: When an individual declares bankruptcy, the official receiver administers their estate, recovering assets to repay creditors.
Company Liquidation: In a court-ordered winding-up, the official receiver would take control of the insolvent company’s affairs, liquidate its assets, and distribute the proceeds to creditors.
Misconduct Investigation: If a company director is suspected of misconduct, the official receiver investigates and reports findings to authorities like the Department for Business, Energy, and Industrial Strategy (BEIS).

Frequently Asked Questions

What is the role of an official receiver in a bankruptcy case?

The official receiver administers the bankrupt individual’s estate, recovers assets, returns funds to creditors, and may investigate the bankrupt’s conduct for possible misconduct.

How is an official receiver appointed?

An official receiver is appointed by the Secretary of State for Business, Innovation, and Skills. They act under the orders of the court in insolvency proceedings.

What is the difference between an official receiver and a liquidator?

While an official receiver is appointed primarily in court-ordered insolvency cases and acts as an interim or acting liquidator, a liquidator can be a private insolvency practitioner appointed by creditors to manage the liquidation process.

Can an official receiver be a permanent liquidator?

Yes, an official receiver can be a liquidator until the creditors appoint another insolvency practitioner or decide to let the official receiver continue.

What happens to the employees of a company being wound up by an official receiver?

Employees are typically made redundant, and their claims for unpaid wages and redundancy payments are treated as priority debts in the liquidation.

Bankruptcy: A legal status for individuals who cannot repay their debts to creditors.
Liquidator: A person or entity appointed to wind up the affairs of an insolvent company by selling assets and paying off creditors.
Insolvency: A financial state where an individual or company cannot meet its debt obligations.
Receiver: An individual or firm appointed to manage the property, business, or assets of a distressed company or bankrupt individual.

Online References

Suggested Books for Further Studies

“Corporate Insolvency Law: Perspectives and Principles” by Vanessa Finch – This book provides an in-depth analysis of the principles of corporate insolvency law, including the role of official receivers.
“Principles of Corporate Insolvency Law” by Roy Goode – An authoritative text on corporate insolvency that covers the responsibilities of official receivers and liquidators.
“Mayson, French, and Ryan on Company Law” by Derek French – This comprehensive guide includes a section on insolvency and the function of official receivers in corporate law.

Accounting Basics: “Official Receiver” Fundamentals Quiz

### What is the primary role of an official receiver in a bankruptcy case? - [x] Administer the bankrupt individual's estate - [ ] Act as a financial advisor - [ ] Provide personal loans - [ ] None of the above > **Explanation:** The primary role of an official receiver in a bankruptcy case is to administer the bankrupt individual's estate, overseeing the recovery of assets to return funds to creditors. ### Who appoints the official receiver? - [x] Secretary of State for Business, Innovation, and Skills - [ ] Local government - [ ] Court judge - [ ] Major creditors > **Explanation:** The official receiver is appointed by the Secretary of State for Business, Innovation, and Skills. They act under court orders in all insolvency proceedings. ### Can an official receiver investigate misconduct? - [x] Yes, they can investigate conduct and report findings to authorities. - [ ] No, they are only responsible for asset liquidation. - [ ] Yes, but only with police supervision. - [ ] No, this is outside their jurisdiction. > **Explanation:** Yes, an official receiver can investigate and report any misconduct by the bankrupt individual or company directors to the relevant authorities. ### In which type of court can one typically find an official receiver? - [x] High Court and county courts with insolvency jurisdiction - [ ] Family Court - [ ] Criminal Court - [ ] Traffic Court > **Explanation:** An official receiver is typically found in the High Court and county courts that have jurisdiction over insolvency matters. ### What does an official receiver typically not do? - [ ] Administer the estate of the bankrupt individual - [ ] Act as interim trustee or liquidator - [ ] Investigate the affairs of the insolvent entity - [x] Provide tax advice to individuals > **Explanation:** An official receiver typically does not provide tax advice to individuals. Their duties are focused on the administration of bankrupt estates, liquidating assets, and investigating conduct. ### What happens to company employees when an official receiver is assigned for winding-up? - [ ] They continue working without interruption. - [x] They are typically made redundant. - [ ] They are automatically employed by the government. - [ ] They must decide their fate through a vote. > **Explanation:** Employees are typically made redundant when an official receiver is assigned for winding-up, and their claims for unpaid wages and redundancy payments are treated as priority debts. ### What is insolvency? - [ ] The process of making high profits - [x] The state of being unable to meet debt obligations - [ ] A temporary cash flow issue - [ ] The condition of having excess assets > **Explanation:** Insolvency refers to the financial state where an individual or company cannot meet its debt obligations, usually leading to bankruptcy or liquidation proceedings. ### What differentiates an official receiver from a liquidator appointed by creditors? - [ ] Nothing, they have the same role. - [ ] Official receivers always work in private firms. - [x] Official receivers are appointed primarily in court-ordered cases. - [ ] Liquidators are only government-appointed. > **Explanation:** Official receivers are appointed primarily in court-ordered insolvency cases, acting as interim liquidators, whereas liquidators can be appointed by creditors and work in private firms. ### Which of the following is a duty exclusive to official receivers? - [ ] Managing personal finances - [ ] Providing investment advice - [x] Investigating bankrupt individuals' conduct - [ ] Managing taxes and retirement accounts > **Explanation:** Investigating the conduct of bankrupt individuals or insolvent company directors is an exclusive duty of official receivers, among their other responsibilities in insolvency proceedings. ### Are deputy official receivers permitted? - [x] Yes, they can be appointed. - [ ] No, only one official receiver can exist at a time. - [ ] Yes, but only in municipal courts. - [ ] No, deputy roles are not recognized. > **Explanation:** Yes, deputy official receivers may also be appointed to manage insolvency cases alongside or in place of the primary official receiver when necessary.

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