Who is the Official Receiver and what is their role in a liquidation process?

Who is the Official Receiver?

The Official Receiver (OR) is a civil servant working for the Insolvency Service, and is also an officer of the court. Once a company is placed into compulsory liquidation, an Official Receiver is immediately appointed to begin the liquidation process.

In some situations, the Official Receiver may pass the liquidation case over to an insolvency practitioner, although they may decide to keep hold of the case and handle the whole liquidation themselves. Much of this will depend on the complexity of the liquidation and the level of assets involved. 

The Official Receiver is accountable to both the courts and to the Secretary of State for the Department for Business, Energy and Industrial Strategy (BEIS), and their role varies depending on the circumstances of each insolvent company facing liquidation.

The role of the Official Receiver as provisional liquidator

A provisional liquidator is required in some insolvency cases, from the time a winding-up petition is presented to the courts. This can occur if the petitioning creditor believes that company assets might be sold, or that another creditor may be treated preferentially by the debtor company prior to the company formally entering liquidation.

As provisional liquidator, the Official Receiver is responsible for safeguarding company assets and records until the winding-up hearing. If a winding-up order is subsequently granted by the court, the Official Receiver will report to creditors and shareholders on the company’s assets and liabilities. They may also make a report to court if necessary.

If there are sufficient assets of value available, the Official Receiver may request the Secretary of State to appoint another liquidator, or ask that creditors do so via a creditors’ meeting.

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What is the Official Receiver's role as liquidator?

If no other liquidator is appointed by the Secretary of State or company creditors, the Official Receiver will remain in office and administer the process. This involves identifying the assets to be sold, arranging for their valuation and sale, and distributing the proceeds equitably among creditors using the statutory hierarchy.

Investigation into the conduct of directors

When a company is liquidated, the Official Receiver takes on an investigative role. They may interview directors to establish the circumstances that led to the company becoming insolvent and request that the directors complete a comprehensive questionnaire. As a director, you are required the assist the Official Receiver when asked.

The Official Receiver will look to establish whether there were any instances of wrongful trading or fraudulent activity that caused the company to fail. There is a responsibility to creditors and the wider public to penalise directors who cause financial loss, whether deliberate or due to a lack of care.

Even when a private insolvency practitioner has been appointed to administer the liquidation process, the Official Receiver’s role as investigator carries on. During their investigations the Official Receiver’s office will scrutinise the company’s financial records as well as interviewing directors, and also making other enquiries with third parties such as the company’s bank and accountant.

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What type of questions will the Official Receiver ask a director?

As part of the investigations, the Official Receiver will need to build up a complete picture of the events leading up to the company becoming insolvent. In order to help this, they will ask a number of questions which are likely to cover:

• The nature and value of the company’s assets and liabilities, as well as details of the director’s own personal assets and liabilities
• The circumstances surrounding the company becoming insolvent
• Whether the minutes of any director meetings were kept, and the information that was recorded
• How creditors have been affected by the insolvency, and whether or not any financial losses could have been prevented by the director if action was taken earlier

In essence, the Official Receiver will be trying to establish whether directors have acted wrongfully or fraudulently, and if creditor losses have been minimised as far as reasonably practical.

The books and records of the insolvent company will be scrutinised by the Official Receiver, and retained by their office. Directors are free to ask questions about the investigation whilst at interview, to find out more about likely proceedings in the future.

If you would like more information about the Official Receiver and their role in liquidation, Real Business Rescue can help. We have extensive experience of company liquidations, and with offices nationwide, you can take advantage of our free initial same-day consultation wherever your location.