Bankruptcy Restrictions Orders
If the Official Receiver or a Trustee in Bankruptcy believes that a Bankrupt’s conduct or actions has been dishonest or blameworthy, they can provide evidence to the Court as to the Bankrupt’s conduct and request that the Bankrupt be subject to restrictions for a length of time.
The Order made by the Court is called a Bankruptcy Restrictions Order.
A. What type of behaviour will justify the making of a Bankruptcy Restrictions Order? Read more
Below are some examples of conduct or actions which can be used to justify the making of a Bankruptcy Restrictions Order:
a) Incurring debts that the Bankrupt knew they had no reasonable chance of repaying
b) Causing debts to increase by neglecting business affairs
c) Carrying on a business when the Bankrupt knew or ought to have known that they could not pay their debts
d) Failing to supply goods or services that have been paid for
e) Failing to keep or produce records that would explain a loss of assets
f) Giving away assets or selling them for less than their value
g) Deliberately paying off some creditors in preference to others
h) Gambling or making rash speculations or being unreasonably extravagant
B. What are the restrictions? Read more
The restrictions contained in a Bankruptcy Restrictions Order are the same restrictions which a Bankruptcy is subject to whilst they are an undischarged Bankrupt.
The restrictions include the following:
• Not to obtain credit of £500 or more either alone or jointly with any another person without disclosing their Bankruptcy
• Not carry on business (directly or indirectly) in a different name from that in which they were made Bankrupt, without telling all those with whom they do business the name in which they were made Bankrupt
• Not be concerned (directly or indirectly) in promoting, forming or managing a limited company, or acting as a company director, without the permission of the Court, whether as a director or not
• Not act as an insolvency practitioner, or as the receiver or manager of the property of a company on behalf of debenture holders and cannot be a MP in England or Wales
C. How long will a Bankruptcy Restrictions Order last? Read more
A Bankruptcy Restriction Order can last from 2 to 15 years and the period set by the Court depends on the severity of the Bankrupt’s conduct.
The more harm which a Bankrupt’s behaviour causes to their creditors, the longer the Bankruptcy Restrictions Order is likely to last.
D. What happens if a Bankrupt breaches a Bankruptcy Restrictions Order? Read more
If a Bankrupt contravenes a Bankruptcy Restriction Order they may be prosecuted and, if found guilty by the Court, can be liable to a criminal penalty such as a fine or imprisonment.
In addition, if a Bankrupt takes part in in managing a limited company without the permission of the Court, whether as a director or not, they can be found personally liable for any debts of the company that arise whilst they are managing it.
How can we help?
We can assist individuals by both defending a Bankruptcy Restrictions Order and negotiating the period of the Bankruptcy Restrictions Order.
If you are Bankrupt and the Official Receiver has contacted you regarding the making of a Bankruptcy Restrictions Order please do not hesitate to contact us should you require any assistance.