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


Insolvency Practitioner Approved

Understanding function of the official receiver in a compulsory liquidation process

The Official Receiver (OR) is a civil servant working on behalf of the Insolvency Service, but is also an officer of the court. They respond to notifications from the courts of company liquidations, and administer the initial stages, although they may also be involved throughout the process in some cases.

The OR is accountable to both the courts and to the Secretary of State for Business, Innovation and Skills, and their role varies depending on the circumstances of each insolvent company facing liquidation.

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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.

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 OR 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.

Their 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.

Part of their role as liquidator is to decide whether to complete any outstanding contracts, and they may decide to consult with the company’s main creditors before making this decision.

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’s insolvency, or request that the directors complete a comprehensive questionnaire.

Essentially, the OR must find out whether there were any instances of misconduct 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 OR’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.

If they discover previously undisclosed assets, but are no longer office-holders themselves, the liquidator will be informed of the situation.

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Official Receiver’s team members

The Official Receiver will not undertake all of the practical work associated with a liquidation process. Instead, they can direct members of staff to carry out certain duties, such as chairing creditors’ meetings, or arranging director interviews.

Although the OR’s duties and responsibilities in liquidation are wide-ranging, investigating the actions of company directors is one of their main roles. This helps to protect the public from unscrupulous individuals who might bring the office of director into disrepute.

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.

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