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Appointing an IP in Voluntary Receivership

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When undergoing voluntary receivership (bankruptcy), the law in the UK states that only an Insolvency Practitioner (IP) can act as the official trustee or liquidator until such time that the courts appoint an official receiver. The role of the IP will be to liquidate/realise assets as well as to make payments to creditors. If the liquidation of assets is straightforward, UK ruling states that the official receiver may act as well. Nonetheless, in voluntary companies insolvency proceedings, realisation may be quite complex which would necessitate the official receiver appointing an IP to oversee the official voluntary liquidation process.

It should be understood that voluntary liquidation is part and parcel of voluntary bankruptcy and all assets can be realised to pay creditors and satisfy any liens or taxes still outstanding. Usually the IP is appointed as either a liquidator or trustee of the voluntary administration within a four month period from the date when bankruptcy or voluntary winding up orders were made. During that four month span, the official receiver acts as manager and/or receiver of the bankrupt's estate or a company's liquidator. Whether or not the IP chosen by the official receiver will be the same as the IP appointed by the bankrupted individual or company is in the hands of the official receiver once the receiver has been appointed by the court.

The official receiver, in other words, has the authority to act as liquidator if the realisation of assets is a simple matter. But if complex issues are involved or if other assets surface during that four month period, the official receiver might very well appoint an Insolvency Practitioner to handle the liquidation of assets and distribution of funds. Even so, the official receiver is still held accountable to the court for any and all transactions.

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