Why are they so important?

There were several milestones in the year 1884.  

The cornerstone of the plinth of the Statue of Liberty was laid; the first edition of the Oxford English Dictionary was published and the Office of the Official Receiver was also established in London 140 years ago. 

The organisation’s long history has seen it evolve from administering personal bankruptcies to overseeing major company liquidations and securing Bankruptcy Restrictions against criminals who pose a threat to the public through their financial wrongdoing.

What is The Official Receiver and what do they do?

The Insolvency Service has 16 Official Receivers that are based across 16 different locations in England and Wales with 600 support staff. 

They act as trustees in people’s bankruptcies and liquidate companies that have been wound up. They also investigate the cause of insolvencies and can secure additional and stringent restrictions against bankruptcy where there is evidence of dishonesty. 

Created by the Bankruptcy Act of 1883, the first cohort of 67 Official Receivers were appointed a year later. 

Originally they would conduct public examinations of bankruptcies and the Senior Official Receiver would appear in formal court dress including a sword and bicorn hat!

Following changes to individual bankruptcy rules in 2016, applicants could now apply online rather than attend court. This was a move towards a more flexible service with further changes focusing on new technology including the introduction of a new case management system.

Among the hundreds of support staff are teams of Deputy Official Receivers, examiners and case workers. The team also includes a dedicated Public Interest Unit that deals with the most complex bankruptcy and liquidation cases, and a National Interest Case Executive that administers high-profile liquidations.

In 2023/24 Official Receivers secured 134 Bankruptcy Restrictions, 93 of which were related to abuse of the Covid loan schemes. They also dealt with 11,000 new cases and returned almost £60 million to creditors. 

Sharon Lewis, Interim Director of Official Receiver Services at the Insolvency Service, said: “Our work makes an impact on people’s lives, whether that’s helping those with overwhelming debt to make a fresh start, safeguarding the public from financial wrongdoing or helping creditors get back money they’re owed.

“We have always been at the heart of the UK’s world-leading insolvency regime and there is real pride in our work and strong connection to our long history of service. 

“As we continue to take a more digital focus to support an insolvency regime that is fit for the 21st Century, we look forward to the next chapter in our story in helping to deliver economic confidence for the UK.”

Duties of an Official Receiver in insolvency

When it comes to winding up orders, the Official Receiver is a key figure. They’re both an officer of the court but also work on behalf of the Insolvency Service. 

Their duties can change depending on the circumstances of the individual case but their overall role is to oversee corporate liquidations and investigate the reasons behind the insolvency. 

While they are appointed in cases of compulsory liquidation, in some instances they don’t conduct the entire liquidation process.

They may enable an independent liquidator to be appointed after the initial stage has been completed:

  • Provisional liquidator

Where there are cases involving risk of directors depriving creditors of liquidation funds by concealing or otherwise disposing of business assets, the OR will act as provisional liquidator. 

They would be appointed by the court on an emergency basis after a winding up petition has been presented but before the court hearing. 

  • Business manager

On appointment the OR will take control of all aspects of a company’s affairs including all accounting records, assets, contracts and leases. Business assets are realised and funds subsequently distributed for the benefit of creditors. 

  • Directors investigations

When a company goes into compulsory liquidation the OR will look into the reasons why. What decisions the directors made, when and their reasons why.  More often than not no wrongdoing has taken place but their role is to establish the facts and an accurate chain of events through these directors’ investigations. 

If a creditor has forced the business to close through legal proceedings then this would be an initial concern as opposed to directors overseeing the liquidation voluntarily if they knew it couldn’t be rescued. 

As well as interviewing directors to establish their role, they can also make enquiries with individuals and organisations associated with the business such as their bank, lenders and accountants. Specifically they would look for any instances or evidence of:-

  • Wrongful trading

If a company’s cash flow means it cannot pay its bills as they fall due or if the value of its assets are exceeded by its liabilities then directors must immediately cease trading to protect creditors interests. If they continue to operate then this is considered wrongful trading. 

  • Preferential payments

Payments made to creditors that unfairly favour one individual or group over others. For example, repaying a loan to a family member or paying off a loan that has a directors’ personal guarantee attached. 

  • Transactions at undervalue

If directors sold business assets for prices lower than their true or typical value, usually during the two years leading up to insolvency, then OR has the power to investigate and apply to the court to have these transactions reversed.

Most directors and business owners won’t ever come into contact with the Official Receiver. They’re simply part of the insolvency framework and structure to help hold fraudulent activity to account. 

But if you’re having to navigate your business through some choppy waters then it’s always good to know that there is always expert help on hand whenever you need it. 

Get in touch with us if you want to know what options you have to help bring your company back into calmer seas or how closure could be the gateway to a better 2025 for you and your employees.