Closing a Case

Closing a Case

September 2024

Introduction

1. When should a case be closed?

When the administration of a case is for all practical purposes complete and any assets have been realised, in order to close the case the official receiver must apply to Estate Accounts Services (EAS), acting on behalf of the Secretary of State, for his/her release as trustee or liquidator. When the official receiver is released he/she is discharged as of that date from all liability in respect of what he/she has done or anything he/she has failed to do in the administration of the estate.

2. What must be done before a case can be closed?

(October 2023)

Prior to the official receiver applying for release a thorough review of the file should take place to ensure that all administrative matters have been dealt with and that all LOIS screens have been updated with the correct information. If there are funds in the estate the official receiver should distribute them as soon as possible . A list of checks that should be made as a minimum is as follows:

all assets have been realised or otherwise accounted for and details recorded on LOIS screen 15
any insurance effected has been cancelled with the premium(s) paid
all correspondence has been answered and correctly dealt with
any agents have accounted for asset realisations and their accounts are correct and have been paid
any items held in the cashier’s safe for safe keeping have been dealt with appropriately
all fees and disbursements have been charged correctly and any payments made in due order of priority
a decision has been made concerning the preservation or destruction of any accounting records
in company matters, it must be determined whether a deferral of the dissolution or early dissolution of a company is necessary, e.g. where there are prosecution/disqualification proceedings, or an occupational pension scheme in existence or is an administrative receiver or Law of Property Act receiver in office or where all matters are considered to be finalised . For more information on these procedures please refer to the Case Help Manual parts : Deferral of Dissolution and Early Dissolution
where the case is identified for transfer to the RTLU, both the RTLU transfer sheet and the RTLU checklist must be fully completed, prior to transfer. See the RTLU protocol for guidance on the suitability of cases for transfer.
where the case is identified as suitable for transfer to National Dividends Unit (NDU) complete the NDU Transfer Form. See the NDU protocol for guidance on the suitability of cases for transfer

3. Estate Accounting

The fees and expenses to be charged for the functions and duties of the official receiver are set down in legislation in both winding up and bankruptcy proceedings. The relevant legislation depends on when the insolvency order was made.

4. Estate accounting in cases where the insolvency order was made on or after 1 April 2024

(Amended April 2024)

If the insolvency order was made on or after 1 April 2004, the Insolvency Proceedings (Fees) Order 2004 (as amended) and Insolvency (Amendment) Regulations 2004 will apply. The only fees chargeable in cases are the Administration fee, the Secretary of State fee and the OR’s Time and Rate fee

5. What is the Administration fee?

(Amended February 2011)

The case administration fee for bankruptcy (Fee B1) and compulsory company cases (Fee W1) is charged on the making of the bankruptcy order and winding-up order respectively. From 6 April 2024 Fee B1 is £1715 (no change) and Fee W1 is £2235 (increased from £2160).This covers the stationery and other incidental fees that were previously charged as well as disbursements such as Gazettes, travel and subsistence, expenses of a process server and advertising costs. The principle is that creditors will pay for the full costs of the official receivers’ administration via deposits and the costs of any investigation and enforcement activities will be paid for by the taxpayer. Disbursements incurred during the realisation and distribution of assets e.g. insurance premiums, agent’s costs, advertising costs relating to distributions are not included and should be charged to the relevant estate as before.

6. What is the Secretary of State fee?

(Amended April 2024)

The Secretary of State (SOS) fee is charged as a percentage on total ‘chargeable receipts’ paid into the Insolvency Services Account (ISA). Following the introduction of the Insolvency Proceedings (Fees) (Amendment) Order 2007, there is no SOS fee payable on funds paid into the ISA on or after 1 April 2007, for cases where the insolvency order was made before 1 April 2004. (See Technical Manual Chapter 36.36)

In addition, there is no SOS fee payable on funds paid into the ISA on or after 6 April 2023, for cases where the insolvency order was made on or before 31 March 2005. (See Technical Manual Chapter 36.38)

For cases where the insolvency order was made on or after 1 April 2005, the SOS fee(fee B2 and W2), calculated as a percentage of total chargeable receipts, is not payable on the first £2,000 banked. Once the net realisations for the case reaches £2,000 the fee is charged at 17%. There is a maximum limit that may be charged on realisations above £80,000 therefore the maximum SOS fee cannot exceed £13,260 (17% of £78K). There is also no SOS fee chargeable on that part of the total receipts that exceeds the bankruptcy ceiling. (See Technical Manual Chapter 36.39).

For bankruptcy or winding-up orders made on or after 6 April 2024 the SOS fee has now been re-structured as detailed in the table below.

SoS Table of percentage fee to be charged

Bankruptcy

Company

0% charge on the first £2,000

0% charge on the first £2,500

100% charge on the next £1,700

75% charge on the next £1,500

15% charge on the next £396,000

1% charge on the balance

The total fee paid is capped at £80,000

7. What is the official receiver’s general remuneration (OR’s Time and Rate)

(October 2023)

When the official receiver acting as trustee or liquidator makes a distribution to creditors or performs any task as liquidator or trustee for which a fee is not otherwise provided, he/she may charge general remuneration for the services provided. This fee is designed on a time and rate basis, i.e. there is an hourly rate for each grade and is calculated according to the time spent by each member of staff in carrying out specific duties.

The National Dividend Unit (NDU) de
al with payment of dividends to creditors and as such are responsible for charging this fee. If required, more information on this fee when distributing funds to creditors can be found in Case Help Manual part : Distributions – Bankruptcy and Companies paragraph xii.

8. Estate accounting in cases where the insolvency order was made before 1 April 2024

For those cases where the bankruptcy or winding-up order was made before 1 April 2004, the provisions of the Insolvency Fees Order 1986 and Insolvency Regulations 1994 still apply.

Technical Manual Chapter 36 paragraphs 36.4 to 36.39 provides comprehensive details of all the fees and disbursements payable and how they should be charged to the estate account in all cases both pre and post 1 April 2004. The LOLA Desk Instructions(LDI) also provide a full explanation of all payments that may be made on the estate including historical rates and includes instructions on how they should charged to the estate ledger together with the relevant LOLA posting code.

VAT is charged on the official receiver’s realisation fees and any time and rate fees, regardless of whether or not the estate is registered for VAT.

9. Notice to creditors

The official receiver must send notice of his intention to apply for release (form NORAD) to all creditors of which he/she is aware. It is not necessary for the creditor to have lodged a proof of debt. The bankrupt should also be sent a copy of the form NORAD under cover of form TRLTB but in company cases, contributories do not receive one.

The notice must also enclose an account summary of the official receiver’s receipts and payments as trustee or liquidator (form ACCSUM), showing the original estimated value of assets compared to that which has been realised. This should be self-explanatory, but if there are any discrepancies between the two sets of figures, such as non-realised assets, a brief explanation should be given in the comments section of form NORAD. In bankruptcy cases, reference should be made to the position of the bankrupt’s discharge, so as not to cause any confusion to creditors or to the bankrupt him/herself. In company cases a comment should be made where there is any proposed application for the deferral of the company’s dissolution.

10. Notice to creditors in early discharge cases

In bankruptcies where the order was made on or after 1 April 2004, and the case has been identified as being suitable for ‘early discharge’ the official receiver may notify creditors of his/her intention to apply for release at the same time as informing them of the bankrupt’s possible early discharge using form EDNCR (Letter to creditors advising early discharge to be granted combined with release notice). For more information on the early discharge process please refer to the Case Help Manual part: Discharge from Bankruptcy.

11. Notice to creditors in early dissolution cases

In company cases the official receiver when liquidator, may apply to the Registrar of Companies for the early dissolution of a company. This is done where the company has no assets, or the total value of any assets is insufficient to cover the costs of its winding up and the affairs of the company do not need any further investigation. The time saved in unnecessary administration is achieved by condensing all the obligatory notices to creditors and contributories into one form, NED, LOIS (DO73) – ‘Dissolution – notice under s202(3) of proposed application for early dissolution’. In effect this combines the no meeting notice with the report to creditors and also acts as a ‘closing notice’ (notice of official receiver’s intention to apply for release).

For more information on this process see Case Help Manual part: Early Dissolution.

12. Creditors’ (and bankrupt’s) ability to object to release

The creditors have 21 days from the date of the notice to object to the official receiver’s release before EAS acting on behalf of the Secretary of State, grants the official receiver his/her release as trustee or liquidator. The creditors are informed in the notice that objections should be made in writing and addressed to the Secretary of State for Business Enterprise and Regulatory Reform, Estate Accounts Services, The Insolvency Service, 3rd Floor, Canon House, 18 Priory Queensway, Birmingham, B4 6BS (or DX 713901 Birmingham 37DX). In the event that a creditor sends his objection to the official receiver by mistake, EAS should be notified by telephone to ensure that the application for release is withdrawn pending receipt of the objection. The objection should then be forwarded as a matter of urgency to EAS.

13. What happens if a creditor objects to the official receiver’s release?

If any objections are made to the official receiver’s release, the matter will be considered by EAS, who may liaise with the official receiver if necessary. If the objection is considered to be valid, a holding letter is sent to the objector and the matter is then referred to Technical Section for adjudication. When the matter is resolved, EAS will send a copy of the certificate of release to the objector.

Once approved there is no mechanism for the official receiver’s release to be revoked. If an objection is raised after 28 days and the release has been granted, the objector is given the option to pursue the matter as a complaint, whereupon the normal complaints procedure would be followed.

14. Why would a creditor object to the official receiver’s release?

Some creditors will tend to object in principle to the release of the official receiver, as they consider that by the official receiver being released the bankrupt/partner/director is “getting off lightly”. Other creditors may have concerns that the bankrupt/partner/director is enjoying a good lifestyle whilst they are suffering as a result of the losses incurred due to the insolvency. It is imperative, therefore, to ensure that all creditor correspondence is dealt with before applying for release.

15. How do you apply to the Secretary of State for the release of the official receiver as liquidator or trustee?

Application to the Secretary of State for the official receiver’s release as trustee or liquidator is made by completing form RELASS, signed according to local office practice. Each application for release must be sent to EAS and enclose:

one copy of the official receiver’s notice to creditors of his/her intention to apply for release (RELASS)
an estate ledger sheet(glr42/ACCSUM)
where appropriate, form DSNDIR and copy RELADR, application for deferred dissolution.

16. Deferred Dissolution

When the official receiver is released as liquidator, EAS will send notice to Companies House that the winding up is complete and the Registrar of Companies will then proceed to dissolve the company at the end of three months, beginning with the day on which the notice is received by the Registrar of Companies. Where an administrative receiver, Law of Property Act receiver or an administrator of a pension scheme is in office however, the official receiver must
take steps to ensure that dissolution is delayed or “deferred”. The official receiver’s application for release need not be delayed unless there is some prospect of surplus money being available from the administrative receiver after the debenture holder has been paid. The official receiver can still apply for release, but at the same time he/she must apply for the dissolution of the company to be deferred usually for two years to allow the receiver sufficient time to complete his/her work.

Before applying for release, the official receiver must write to any administrative receiver, Law of Property Act receiver or an administrator of a pension scheme in office stating that, unless he/she hears to the contrary, the official receiver intends to apply for release and will request that the Secretary of State defers the dissolution of the company for two years from the date that release is granted (form RELADR). At least 28 days should be allowed for a response from the receiver.

Where there are outstanding disqualification or prosecution proceedings, an application should be made for the dissolution to be deferred for six years. Similarly, where the winding-up of an occupational pension scheme remains to be concluded, an estimate of the time that it will take to complete is required and the appropriate period of deferral (in whole years) should be applied for.

For more detailed information please see Case Help Manual part: Deferral of Dissolution

17. What happens when release is granted?

When release is granted, EAS will send a certificate of release to the court but a certificate will not be forwarded to the official receiver. In company cases, EAS will prepare the notice that the winding-up is complete (form NOTCH) and forward this to Companies House together with any deferral of dissolution directions.

A copy of the paperwork sent to Companies House regarding deferral of dissolution will be sent to the official receiver for placing on the official receiver’s file and recording on LOIS.

The date of release will be automatically recorded on LOIS by LOLA following the write off of any debit or nil balance. The request for write off of any nil or debit balance must be entered on LOLA by the official receiver.

18. Partnerships

Release should be applied for in respect of every estate account opened regarding a winding-up order or bankruptcy order made in relation to a partnership. When dealing with a joint bankruptcy partnership (Article 11) a separate application should be made in each estate including the partnership estate. Although there is no winding-up order made against the partnership, on the making of the bankruptcy order in a joint petition matter, the official receiver becomes trustee of the partnership. A ledger account is therefore opened for the joint estate and release must be applied for in the joint estate at the same time as each of the members’ separate estates.

For more detailed information on this subject please refer to the Case Help Manual part: Distributions – Partnerships.

Where can I find out more?

The Insolvency Act 1986

Section 174 Release (winding up by the court).

Section 299 Release of trustee

The Insolvency Proceedings (Fees) (Amendment) Order 2023

Insolvency Rules

4.124 Release of Official Receiver.

6.136 Release of Official Receiver.

Technical Manual

Chapter 36 Estate accounting

Chapter 37 Release of OR as liquidator or trustee

Chapter 38 Dissolution

Case Help Manual

Deferral of Dissolution

Early Dissolution

Discharge from Bankruptcy

Partnerships

Distributions: Bankruptcy and Companies

Distributions: Partnership

LOLA Desk Instructions

LOIS Workbook: Closing Re-opening Cases

Forms to be used:

ACCSUM Account Summary

DSNDIR Company Dissolution

EDNCR Notice of OR’s intention to file early discharge

FILEMK File marker

NORAD Notices, Release and Dividend

NOTCH Notices to Companies House

RELASS Release, OR’s application to Secretary of State for release

RELADR Release, notice to administrative receiver re release

TRLTB Trustee Release, Letter to Bankrupt

Click HERE to view the Flowchart for Closing A Case – Bankruptcies

Click HERE to view the Flowchart for Closing A Case – Companies

Procedure

LOIS references are given in brackets, e.g. (DO73)

Preparing a case for closing

The following LOIS screens can form part of a checklist to be used before closing a case, according to your local office practices.

All cases

1 Confirm that all actions have been completed and recorded on LOIS (CA08) and all correspondence dealt with.

2 Complete all outstanding filing.

3 Check that all information has been correctly recorded on LOIS (CA02), including all personal details, such as date of birth, national insurance number, etc.

4 Check that full details have been recorded on LOIS (CA03) including trading and advertising details and VAT registration number.

5 Check that all assets have been dealt with and recorded on LOIS (CA15).

6 Check meeting details entered on LOIS (CA21).

7 Check all creditors information and proofs of debt have been entered on LOIS (CA31).

8 Check the case books and papers register on LOIS (CA27). Where they are currently under the official receiver’s control, ensure that form BPOGD (Books & Papers, Notices to OGDs) has been sent to HMRC. If this has not been done previously, send the form now and allow at least 6 weeks for a reply. Check with examiner whether records are to be preserved or destroyed to prevent unnecessary and costly storage. For further information on this procedure, please refer to the Case Help Manual part : Books and Papers : Receipt, handling, recording and
destruction.

9 If case marked FI (CA08), check with examiner that case can be closed.

Bankruptcy only

10 Check that the HM Land Registry WO(B) number(s) have been entered on LOIS (CA09). This confirms that Land Registry has received details of the insolvency.

11 Check for IPO/IPA on LOIS (CA32/78) and if appropriate, prepare to transfer case to RTLU.

12 Check details of discharge date on LOIS (CA25).

Company cases only

13 Check that CRO number(s) have been recorded on LOIS (CA03).

14 Check details of deferral of dissolution, if appropriate, are entered on LOIS (CA26).

15 Check that winding up order filed at Companies House and status shown is correct.

16 Check that D1 or D3 form details have been entered on LOIS (CA34).

17 Where there is an administrative receiver, Law of Property Act receiver or an administrator of a pension scheme in office prepare form RELADR which will include:

full name of the company and court number;
that it is the official receiver’s intention to apply for his/her release;
that it is the official receiver’s intention to apply to the Secretary of State for the dissolution of the company to be deferred for (usually) two years from the date that release is granted
that the relevant person has 28 days to reply
the authority of the official receiver as to the destruction of books, papers or other records held

All cases

18 Obtain a copy of the LOLA estate account (glr 50) and check that all statutory fees, official receiver’s disbursements and any realisations and/or agents costs have been charged correctly.

19 File completed form FILEMK on the office file

20 Affix any local office Closing Authorization Sheet to the front of the office file and send to the B1 for approval, according to local office practices.

Credit balance on estate

21 Where there remains a credit balance on the estate after payment of all fees and charges, consideration must be given as to whether there are sufficient funds to return a deposit and/or make a payment on account of/in full of the petition costs. For further information on this procedure please refer to Case Help Manual part: Distributions.

When the case has been approved for closing

22 Where a credit balance remains after a return of deposit and/or a payment on account of/in full of the petition costs has been made, use the Dividend Probability Calculator – Provincial or the Dividend Probability Calculator – London to assess whether there are sufficient funds to enable the NDU to make a distribution to creditors. If the balance on the estate meets the criteria (see NDU protocol) prepare the NDU transfer sheet and transfer the case on LOIS (CA41).

23 Where form ACCSUM is to be used as a summary of the official receiver’s receipts and payments, complete from the details shown on the estate ledger (glr 50) and the original report to creditors. Alternatively a glr 42 printout may be used.

The summary of the official receiver’s receipts and payments (form ACCSUM) should show :

Estimate(s) of the amount (£) of assets to be realised and actual realisations
Details of any deposit
Costs of realising assets i.e. agents costs, advertising costs
Total net Realisations
Any payments made from the estate including fees for administration and/or return of deposit, law costs and dividend payments.
Total payments
Balance on the estate, which should agree with the balance on the estate ledger (glr 50)

24 Send a copy of form NORAD to all known creditors as listed on LOIS (CA31) together with a summary of the official receiver’s receipts and payments.

25 A copy of form NORAD will be automatically printed addressed to the court and should be filed at court accordingly. In bankruptcy a copy of form NORAD must also be sent to the bankrupt under cover of form TRLTB.

26 Before applying for release to Estate Account Services (EAS), application to write off the nil or debit balance must be made on LOLA (GLM81). Please note that the date release is applied for must be recorded on LOIS(CA26) the day before glm 81 is updated to enable the application to be registered before write off is applied for.

Release application

Bankruptcy

27 Prepare 2 copies of official receiver’s application to Secretary of State for release (RELASS) on LOIS (DO73). One copy is for the office file.

Send form RELASS to EAS together with:

a copy of form NORAD
A copy of the estate ledger (form glr 42/ACCSUM)
A copy of the original report to creditors (optional)

28 Place one copy of the OR’s application for release on the office file.

29 Record the Application for Release (AFR) date on LOIS (CA26).

30 Select the reason for AFR, namely:

B Debit Balance;

D Distribution to preferential creditors, or

P Payment to creditors.

Release granted

31 EAS will send a certificate of release to the court but the official receiver will not receive a copy of this. The date of the official receiver’s release will be automatically recorded on LOIS (CA26) when the debit balance or nil balance is written off on LOLA by EAS.

Companies

32 Prepare 2 copies of official receiver’s application to Secretary of State for release (RELASS) on LOIS (DO73). One copy is for the office file.

Deferred Dissolution

When preparing form RELASS, where dissolution is to be deferred, choose the appropriate option and complete as required.
Prepare form DSNDIR (DO73) entering details of the section under which deferral is being applied for as instructed on LOIS (CA08)

For further information and guidance see Case Help Manual part : Deferral of Dissolution.

33 Send form RELASS to EAS together with:

a copy of form NORAD
a copy of the estate ledger (form glr 42/ACCSUM)
a copy of the original report to creditors (optional)
a copy of form RELADR and any reply received from the relevant receiver or pension scheme administrator in a deferred dissolution matter
completed form DSNDIR in a deferred dissolution matter

34 Place one copy of the official receiver’s application for release (RELASS) on the office file.

35 Record the Application for Release (AFR) date on LOIS (CA26).

36 Select the reason for AFR, namely:

B Debit Balance;

D Distribution to preferential creditors, or

P Payment to creditors

Release granted

37 EAS will send a certificate of release to the court but the official receiver will not receive a copy. In company cases, EAS will also send notification that the winding-up is complete (form NOTCH) to Companies House. The date of the official receiver’s release will be automatically updated on LOIS (CA26) when the debit balance or nil balance is written off on LOLA by the official receiver.

Deferred dissolution

38 EAS will inform Companies House of the Secretary of State’
s directions to defer dissolution of the company. Copies of the relevant paperwork will be provided to the official receiver, who is then responsible for entering this information on LOIS (CA26).