Official Receiver Examinations
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How to prepare for the intreview
We provide directors and individuals with guidance and advice on how to avoid adverse proceedings.
CALL 020 7504 1300 NOW
Support for directors and individuals
Call 0207 504 1300 now for assistance with your Official Receiver Examination
When a company becomes the subject of a Compulsory Winding up Order, the court draws up an order and makes a ruling to effectively end the company's existence.
The office of the Official Receiver deals with all new bankruptcy and company winding up orders for the court.
If money is in the company's bank account(s) but there are no assets to be realised, the Official Receiver may act as an interim liquidator, and ask for the cash to be transferred into the company's liquidation estate.
They will use the information you provide to produce a statement of affairs, which is shared with creditors to explain why the company has been wound up.
The Official Receiver will randomly select a local insolvency practitioner to liquidate the company on behalf of the Secretary of State for Business, Energy and Industrial Strategy if the company has physical assets, and there are investigations to be conducted.
Official Receiver Examination
As part of the winding up process, an examiner from the Official Receiver’s office may summon anyone who had a relationship with the company in the 3 years leading up to its demise.
Usually, the company director is summoned to the Insolvency Service to be interviewed about their business affairs and conduct. However, in order to gain a comprehensive understanding of the insolvency, the Official Receiver may request interviews with as many people connected to the company as necessary. Before the interview, you will be asked to complete a questionnaire detailing the company's:
- Financial affairs
- Business activities.
You should either bring the completed questionnaire to the interview or post it back to the Official Receiver beforehand.
How to Prepare
The best approach for the Official Receiver Examination is to be open and honest, and explain all the steps you took to protect the interests of the company's creditors, shareholders and employees, and Her Majesty’s Revenue and Customs (HMRC). Most directors are ill-prepared for the examination, but I&L can mitigate any discomfort by:
- Guiding you through the process
- Preparing you for the interview
- Helping to explain your actions.
The Official Receiver and Examiner act solely in the interest of the company's creditors, so they’re unable to provide you with advice that's in your best interest. I&L will counsel you on the issues that require attention to limit any adverse consequences against you such as personal liability claims, Director Disqualification Proceedings, or worse.
Allegations of Misconduct
The Examiner looks for evidence of misconduct (also known as Misfeasance) by the director, and will try to determine whether the trust creditors placed in the company and its director(s) was misplaced or abused. Examiners ask lots of questions and seek to identify areas where the director may have committed acts of misfeasance. But if they believe mistakes were entrepreneurial rather than malicious, the director will not be severely reprimanded.
In the months leading up to and during insolvency, the company would've collected VAT, National Insurance, and PAY taxes. Was any of this money handed over to HMRC and if not, what happened to the exchequer's revenue? In many instances, a competent insolvency practitioner will highlight how money that should've been sent to HMRC was used to repay the director's loan account, or compensate friends and suppliers the director was planning to bring over to a new business. Either way, both examples would reveal evidence of preferential treatment to creditors at the expense of HMRC.
Directors' Conduct D-Report
Depending on the type of liquidation, either the liquidator or Official Receiver will file to the Insolvency Service a Directors' Conduct D-Report, which is a confidential document outlining the director's behaviour. To prevent liquidators and Official Receivers straying from the truth, the D-Report is quite prescriptive and asks questions like:
- How many creditors are involved?
- When were the creditors last paid?
- How much is owed to HMRC?
- When was the last tax payment made?
- When were orders placed?
- What are the dates of the last invoices?
- How many purchases were made in the months leading up to insolvency?
The D-Report is submitted to the Secretary of State for Business, Energy and Industrial Strategy. Director Disqualification Proceedings may follow if its content raises any serious questions about the director's conduct, especially if they owe significant debts to HMRC.
Lost Accounts, Books and Records
It's surprising how many directors turn up for interviews claiming to have 'lost' the company's accounts, books, and records. This is a pretty senseless idea because according to Section 386 of the Companies Act 2006; a director must maintain company accounting records for up to 6 years, and failure to deliver them upon request is an offense.
Creditors' Voluntary Liquidations
In a Creditors' Voluntary Liquidation (CVL), the liquidator examines the director as the Official Receiver would, but the Examination is less formal e.g. interviews are sometimes conducted via telephone. Similarly, whereas in a Compulsory Liquidation the liquidator is appointed by the Official Receiver and has no loyalty to the director; in a CVL the liquidator is nominated by the director who therefore has greater control over the insolvency.
Dealing with Liquidators
The role of the liquidator is sometimes contradictory because although they're supposed to serve and protect creditors in Compulsory Liquidations, complaints of excessive liquidator fees are common. Equally conflicting is the notion that a liquidator in a CVL is supposed to serve and protect creditors because to get the job they must first cosy up to the company's director.
Official Receiver Examinations are very serious and you will need expert assistance and support. I&L can prepare, guide and advise directors how to protect themselves against adverse proceedings. Call 020 7504 1300 now for free and confidential advice…