Part II of the Insolvency Act (Chapter 253) creates the office that holds the personal insolvency system together.
Sections 5 and 6 — appointment and security
5(1) The Minister may appoint a person to be the official trustee.
5(2) Where the official trustee dies, leaves the country, or is removed from office, the Minister may appoint another person in his place.
5(3) The successor (a) has all the rights, powers, duties and liabilities of his predecessor, and (b) all property vested in the predecessor as official trustee vests in him by virtue of the appointment.
6. Where the Minister requires it, the official trustee shall, before entering on his duties, give such security by bond for the due performance of his duties as the Court directs.
Section 5(3)(b) is the same automatic vesting principle as section 68: estates move with the office, without conveyances.
Section 7 — the 5% levy
(1) The official trustee shall pay into the Consolidated Revenue Fund 5% of any sums that come to his hands as trustee as the proceeds of property realised or debts collected while he is acting as trustee.
(2) The percentage is not chargeable on moneys that come to him by devolution from an elected trustee who preceded him in office.
The levy funds the public office. Subsection (2) prevents double charging: money already collected by an elected trustee and passed on when the official trustee takes over is not levied again.
Sections 8 and 9 — what happens immediately
Immediately on the presentation of a petition under Division III.2, the official trustee shall (a) take possession, or cause possession to be taken, of all the property of the petitioner; and (b) retain it in his possession and custody until an adjudication has been made or the petition has been dismissed.
(1)(a) Until a trustee is elected under section 54, the official trustee is the trustee for the purposes of this Act; and (b) immediately on the order of adjudication being made the property of the insolvent passes to and vests in the official trustee, and remains vested in him until a trustee is elected.
(2) He shall then (a) take possession of the property; (b) cause any property of a perishable nature to be sold; and (c) preserve the residue until the election of a trustee or the elapse of the time for it, whichever first occurs.
On a debtor’s petition, possession is taken on presentation — before any adjudication, and even if the petition is later dismissed. That is a considerable intrusion, justified by the risk that a debtor who has decided to petition may dissipate assets in the interval.
On a creditor’s petition, nothing happens until the order of adjudication, at which point the property vests automatically. Before that, a creditor concerned about dissipation must look to the Court’s general powers and to the pre-adjudication examination powers in sections 40 to 42.
The official trustee’s interim role is deliberately limited: take possession, sell perishables, preserve the rest. Substantive realisation waits for the elected trustee.
Sections 10 to 12 — supervising elected trustees
(1) An elected trustee shall, not less frequently than once in every six months during the insolvency, transmit to the official trustee a statement in the prescribed form showing the proceedings in the insolvency.
(2) Failure to do so is a contempt of court.
(3) The official trustee (a) shall examine the statements; (b) shall call the elected trustee to account for any misfeasance, neglect or omission appearing on them; and (c) may require the elected trustee to make good any loss the estate has sustained by it.
(4) If the elected trustee fails to comply, the official trustee may report the failure to the Court, which, after hearing the trustee’s explanation, shall make such order as it thinks just.
The official trustee may (a) require an elected trustee to answer any inquiry in relation to any insolvency in which he is engaged; (b) if he thinks fit, apply to the Court to examine the elected trustee or any other person, on oath, concerning the insolvency; and (c) direct a local investigation to be made of the books and vouchers of the elected trustee.
Section 10(3)(c) is unusually direct: the official trustee may require the elected trustee to make good the loss, without first going to Court. The Court’s role under subsection (4) comes only if the trustee refuses.
Compare the company regime, where a liquidator is supervised by the Court on application under sections 332 and 334, and where the Registrar is one applicant among several. Here the supervision is administrative and continuous.
Under section 12, sections 10 and 11 apply to every trustee appointed under Division XIV.1 — the trustees of a liquidation by arrangement — as well as to elected trustees.
Sections 13 and 14 — returns and public records
13. The officers of the Court acting in insolvency shall make such returns of the business of the Court and of their offices, at such times and in such manner and form, as the Rules of Court prescribe.
14. The official trustee shall keep, in the manner prescribed by the Rules of Court, books that shall be open for public information and searches.
Section 14 is the personal-insolvency public register. Together with the National Gazette publication of every adjudication under section 43 — production of which is conclusive evidence that a person was adjudged insolvent and of the date — it is how a lender, employer or counterparty can find out whether someone is an undischarged insolvent.
That matters well beyond this Act: an undischarged bankrupt cannot be a director under section 129 of the Companies Act, a receiver under section 256(1)(e), or a liquidator under section 328(2)(d) — and is automatically prohibited from managing a company under section 425(1)(c).
Sources
- Insolvency Act (Chapter 253) — ss 5–14, 40–43, 54, 68; Division XIV.1
- Companies Act 1997 — ss 129, 256, 328, 332, 334, 425
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.