CHAPTER IV - ADMINISTRATION BY TRUSTEE
Preliminary
305.General functions of
trustee
(1) This Chapter applies in relation to
any bankruptcy where either -
(a) The appointment of a person as
trustee of a bankrupt's estate takes
effect, or
(b) the official receiver becomes
trustee of a bankrupt's estate.
(2) The function of the trustee is to get
in, realise and distribute the bankrupt's
estate in accordance with the following
provisions of this Chapter; and in the
carrying out of that function and in the
management of the bankrupt's estate the
trustee is entitled, subject to those
provisions, to use his own discretion.
(3) It is the duty of the trustee, if he
is not the official receiver -
(a) to furnish the official receiver
with such information,
(b) to produce to the official
receiver, and permit inspection by the
official receiver of, such books, papers
and other records, and
(c) to give the official receiver
such other assistance, as the official
receiver may reasonably require for the
purpose of enabling him to carry out his
functions in relation to the bankruptcy.
(4) The official name of the trustee
shall be "the trustee of the estate of a
bankrupt" (inserting the name of the
bankrupt) ; but he may be referred to as
"the trustee in bankruptcy" of the
particular bankrupt.
Acquisition, control and realisation of
bankrupt's estate
306. Vesting of
bankrupt's estate in trustee
(1) The bankrupt's estate shall vest in
the trustee immediately on his appointment
taking effect or, in the case of the
official receiver, on his becoming trustee.
(2) Where any property which is, or is to
be, comprised in the bankrupt's estate vests
in the trustee (whether under this section
or under any other provision of this Part),
it shall so vests without any conveyance,
assignment or transfer.
307. Aft
294(3) and 297(6) below.
(2) Subject to the next section, if the
official receiver decides not to summon such a
meeting, he shall, before the end of the period
of 12 weeks above mentioned, give notice of his
decision to the court and to every creditor of
the bankrupt who is known to the official
receiver or is identified in the bankrupt's
statement of affairs.
(3) As from the giving of the court of a
notice under sub-section (2), the official
receiver is the trustee of the bankrupt's
estate.
294. Power of creditors to
requisition meeting
(1) Where in the case of any bankruptcy -
(a) the official receiver has not yet
summoned, or has decided not to summon, a
general meeting of the bankrupt's creditors
for the purpose of appointing the trustee,
and
(b) a certificate for the summary
administration of the estate is not for time
being in force,
any creditor of the bankrupt may request
the official receiver to summon such a
meeting for that purpose.
(2) If such a request appears to the official
receiver to be made with the concurrence of not
less than one-quarter, in value, of the
bankrupt's creditors (including the creditor
making the request), it is his duty of the
official receiver to summon the requested
meeting.
(3) Accordingly, where the duty imposed by
subsection (2) has arisen, the official receiver
is required neither to reach a decision for the
purposes of section 293(1) nor (if he has
reached one) to serve any notice under section
293(2).
295. Failure of meeting to appoint
trustee
(1) If a meeting summoned under section 293
or 294 is held but no appointment of a person as
trustee is made, it is the duty of the official
receiver to decide whether to refer the need for
an appointment to the Secretary of State.
(2) On a reference made in pursuance of that
decision, the Secretary State shall either make
an appointment or decline to make one.
(3) If
(a) the official receiver decides not to
refer the need for an appointment to the
Secretary of State, or
(b) on such a reference the Secretary of
State declines to make an appointment,
the official receiver shall give notice
of his decision or, as the case may be, of
the Secretary of State's decision to the
court
(4) As from the giving of the notice under
subsection (3) in a case in which no notice has
been given under section 293(2), the official
receiver shall be trustee of the bankrupt's
estate.
296. Appointment of trustee by
Secretary of State
(1) At any time when the official receiver is
the trustee of a bankrupt's estate by virtue of
any provision of this Chapter (other than
section 297(1) below) he may apply to the
Secretary of State for the appointment of a
person as trustee instead of the official
receiver.
(2) On an application under subsection (1)
the Secretary of State shall either make an
appointment or decline to make one.
(3) Such an application may be made
notwithstanding that the Secretary of State has
declined to make an appointment either on a
previous application under subsection (1) or on
a reference under section 295 or under section
300(4) below.
(4) Where the trustee of a bankrupt's estate
has been appointed Secretary of State (whether
under this section or otherwise), the trustee
shall give notice to the bankrupt's creditors of
his appointment or, if the court so allows,
shall advertise his appointment in accordance
with the court's directions.
(5) In that notice or advertisement the
trustee shall
(a) state whether he proposes to summon a
general meeting of the bankrupt's creditors
for the purpose of establishing a creditors'
committee under section 301, and
(b) if he does not propose to summon such
a meeting, set out the power of the
creditors under this Part to require him to
summon one.
297. Special Cases
(1) Where a bankruptcy order is made on a
petition under section 264(1)(d) (criminal
bankruptcy), the official receiver shall be
trustee of the bankrupt's estate.
(2) Subject to the next subsection, where the
court issues a certificate for the summary
administration of a bankrupt's estate the
official receiver shall, as from the issue of
that certificate, be the trustee.
(3) Where such a certificate is issued or is
in force, the court may, if it thinks fit,
appoint a person other than the official recever
as trustee.
(4) Where a bankruptcy order is made in a
case in which an insolvency practitioner's
report has been submitted to the court under
section 274 but no certificate for the summary
administration of the estate is issued, the
court, if it thinks fit, may on making the order
appoint the person who made the report as
trustee.
(5) Where a bankruptcy order is made (whether
or not on a petition under section 264(1)(c) at
a time when there is a supervisor of a voluntary
arrangement approved in relation to the bankrupt
under Part VIII, the court, if it thinks fit,
may on making the order appoint the supervisor
of the arrangement as trustee.
(6) Where an appointment is made under
subsection (4) or
(5) of this section, the official receiver is
not under the duty imposed by section 293(1) (to
decide whether or not to summon a meeting of
creditors).
(7) Where the trustee of a bankrupt's estate
has been appointed by the court, the trustee
shall give notice to the bankrupt's creditors of
his appointment or, if the court so allows,
shall advertise his appointment in accordance
with the directions of the court.
(8) In that notice or advertisement he shall
-
(a) state whether he proposes to summon a
general meeting of the bankrupt's creditors
for the purposes of establishing a
creditors' committee under section 301
below, and
(b) if he does not propose to summon such
a meeting, set out the power of the
creditors under this Part to require him to
summon one.
298. Removal of trustee; vacation
of office
(1) Subject as follows, the trustee of a
bankrupt's estate may be removed from office
only by an order of the court or by a general
meeting of the bankrupt's creditors summoned
specially for that purpose in accordance with
the rules.
(2) Where the official receiver is trustee by
virtue of section 297(1), he shall not be
removed from office under this section.
(3) A general meeting of the bankrupt's
creditors shall not be held for the purposes of
removing the trustee at any time when a
certificate for the summary administration of
the estate is in force.
(4) Where the official receiver is trustee by
virtue of section 293(3) or 295(4) or a trustee
is appointed by the Secretary of State or
(otherwise than under section 297(5) by the
court, a general meeting of the bankrupt's
creditors shall be summoned for the purpose of
replacing the trustee only if -
(a) the trustee thinks fit, or
(b) the court so directs, or
(c) the meeting is requested by one of
the bankrupt's creditors with the
concurrence of not less then one-quarter, in
value, of the creditors (including the
creditor making the request).
(5) If the trustee was appointed by the
Secretary of State, he may be removed by a
direction of the Secretary of State.
(6) The trustee (not being the official
receiver) shall vacate office if he ceases to be
a person who is for the time being qualified to
act as an insolvency practitioner in relation to
the bankrupt.
(7) The trustee may, in the prescribed
circumstances, resign his office by giving
notice of his resignation to the court.
(8) The trustee shall vacate office on giving
notice to the court that a final meeting has
been held under section 331 in Chapter IV and of
the decision (if any) of that meeting.
(9) The trustee shall vacate office if the
bankruptcy order is annulled.
299. Release of trustee
(1) Where the official receiver has ceased to
be the trustee of the bankrupt's estate and a
person is appointed instead, the official
receiver shall have his release with effect from
the following time, that is to say -
(a) where that person is appointed by a
general meeting of the bankrupt's creditors
or by the Secretary of State, the time at
which the official receiver gives notice to
the court that he has been replaced, and
(b) where that person is appointed by the
court, such time as the court may determine.
(2) If the official receiver while he is the
trustee gives notice to the Secretary of State
that the administration of the bankrupt's estate
in accordance with Chapter IV of the Part is for
practical purposes complete, he shall have his
release with effect from such time as the
Secretary of State may determine.
(3) A person other than the official receiver
who has ceased to be the trustee shall have his
release with effect from the following time,
that is to say -
(a) in the case of a person who has been
removed from office by a general meeting of
the bankrupt's creditors that has not been
resolved against his release or who has
died, the time at which notice is given to
the court in accordance with the rules that
person has ceased to hold office;
(b) in the case of a person who has been
removed from office by a general meeting of
the bankrupt's creditors that has resolved
against his release, or by the court, or by
the Secretary of State, or who has vacated
office under section 298(6), such time as
the Secretary of State may, on an
application by that person, determine;
(c) in the case of a person who has
resigned, such time as may be prescribed;
(d) in the case of a person who has
vacated office under section 298(8) -
(i) if the final meeting referred to
in that subsection has resolved against
that person's release, such time as the
Secretary of State may, on an
application by that person, determine;
and
(ii) if that meeting has not yet
resolved, the time at which the person
vacated office.
(4) Where a bankruptcy order is annulled, the
trustee at the time of the annulment has his
release with effect from such time as the court
may determine.
(5) Where the official receiver or the
trustee has his release under this section, he
shall, with effect from the time specified in
the preceding provisions of this section, be
discharged from all liability both in of acts or
omissions of his in the administration of the
estate and otherwise in relation to his conduct
as trustee.
But nothing in this section prevents the
exercise, in relation to a person who has had
his release under this section, of the court's
powers under section 304.
300. Vacancy in office of trustee
(1) This section applies where the
appointment of any person as trustee of a
bankrupt's estate fails to take effect or, such
an appointment having taken effect, there is
otherwise a vacancy in the office of trustee.
(2) The official receiver shall be trustee
until the vacancy is filled.
(3) The official receiver may summon a
general meeting of the bankrupt's creditors for
the purpose of filling the vacancy and shall
summon such a meeting if required to do so in
pursuance of section 314(7) (creditors'
requisition).
(4) If at the end of the period of 28 days
beginning with the day on which the vacancy
first came to the official receiver's attention
has not summoned, and is not proposing to
summon, a general meeting of creditors for the
purpose of filling the vacancy, he shall refer
the need for an appointment to the Secretary of
State.
(5) Where a certificate for the summary
administration of the estate is for the time
being in force -
(a) the official receiver may refer the
need to fill any vacancy to the court or, if
the vacancy arises because a person
appointed by the Secretary of State has
ceased to hold office, to the court or the
Secretary of State, and
(b) subsections (3) and (4) of this
section do not apply.
(6) On a reference to the Secretary of State
under subsection (4) or (5) the Secretary of
State shall either make an appointment or
decline to make one.
(7) If on a reference under subsection (4) or
(5) no appointment is made, the official
receiver shall continue to be trustee of the
bankrupt's estate, but without prejudice to his
power to make a further reference.
(8) References in this section to a vacancy
include a case where it is necessary, in
relation to any property which is or may be
comprised in a bankrupt's estate, to revive the
trustee-ship of that estate after the holding of
a final meeting summoned under section 331 or
the giving by the official receiver of notice
under section 299(2).
Control of Trustee
301. Creditors' Committee
(1) Subject as follows, a general meeting of
a bankrupt's creditors (whether summoned under
the preceding provisions of this Chapter or
otherwise) may, in accordance with the rules,
establish a committee (known as "the creditors'
committee") to exercise the functions conferred
on it by or under this Act.
(2) A general meeting of the bankrupt's
creditors shall not establish such a committee,
or confer any functions on such a committee, at
any time when the official receiver is the
trustee of the bankrupt's estate, except in
connection with an appointment made by that
meeting of a person to be trustee instead of the
official receiver.
302. Exercise by Secretary of State
of functions of creditors' committee
(1) The creditors' committee is not to be
able or required to carry out its functions at
any time when the official receiver is trustee
of the bankrupt's estate; but at any such time
the functions of the committee under this Act
shall be vested in the Secretary of State,
except to the extent that the rules otherwise
provide.
(2) Where in the case of any bankruptcy there
is for the time being no creditors' committee
and the trustee of the bankrupt's estate is a
person other than the official receiver, the
functions of such a committee shall be vested in
the Secretary of State, except to the extent
that the rules otherwise provide.
303. General control of trustee by
the court
(1) If a bankrupt or any of his creditors or
any other person is dissatisfied by any act,
omission or decision of a trustee of the
bankrupt's estate, he may apply to the court;
and on such an application the court may
confirm, reverse or modify any act or decision
of the trustee, may give him directions or may
make such other order as it thinks fit.
(2) The trustee of a bankrupt's estate may
apply to the court for directions in relation to
any particular matter arising under the
bankruptcy.
304. Liability of trustee
(1) Where on an application under this
section the court is satisfied -
(a) that the trustee of a bankrupt's
estate has misapplied or retained, or become
accountable for, any money or other property
comprised in the bankrupt's estate, or
(b) that a bankrupt's estate has suffered
any loss in consequence of any misfeasance
or breach of fiduciaryy or other duty by a
trustee of the estate in the carrying out of
his functions
the court may order the trustee, for the
benefit of the estate, to repay, restore or
account for money or other property
(together with interest at such rate as the
court thinks just) or, as the case may
require, to pay such sum by way of
compensation in respect of the misfeasance
or breach of fiduciary or other duty as the
court thinks just.
This is without prejudice to any
liability arising apart from this section
(2) An application under this section may be
made by the official receiver, the Secretary of
State, a creditor of the bankrupt or (whether or
not there is, or is likely to be, a surplus for
the purposes of section 330(5) (final
distribution) the bankrupt himself.
But the leave of the court is required for
the making of an application if it is to be made
by the bankrupt or if it is to be made after the
trustee has had his release under section 299.
(3) Where -
(a) the trustee seizes or disposes of any
property which is not comprised in the
bankrupt's estate, and
(b) at the time of the seizure or
disposal the trustee believes, and has
reasonable grounds for believing, that he is
entitled (whether in pursuance of an order
of the court or otherwise) to seize or
dispose of that property,
the trustee is not liable to any person
(whether under this section or otherwise) in
respect of any loss or damage resulting from
the seizure or disposal except in so far as
that loss or damage is caused by negligence
of the trustee; and he has lien on the
property, or the proceeds of its sale, for
such of the expenses of the bankruptcy as
were incurred in connection with the seizure
or disposal
(5) Subsection (4) applies to a bankrupt
after his discharge.
(6) If the bankrupt without reasonable excuse
fails to comply with any obligation imposed by
this section, he is guilty of a contempt of
court and liable to be punished accordingly (in
addition to any other punishment to which he may
be subject).
The above is the actual text of the
Insolvency Act 1986.
For more information please visit: Her
Majesty's Stationery Office.
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