Redundancy while bankrupt

Jack_BaUer_4

Good morning,

i've been looking at this site for a while now and comments from helpfull members made me have the courage to go bankrupt on 19/07/07,thank you.

My question is:

im in a job but they have offered me a redundancy package. i hope to be in new employment after but would i be allowed to keep the redundancy money as im a bankrupt?

Any help on this would be great

many thanks.

seven2seven

Without stating the obvious , thats what the OR is for. Give them a call and say that people are being offered redundancy where you work and you are considering your options as to what to do. The OR should help , although some of that redundancy may go towards some of your debts. Anyhow , thats my suggestion .Good Luck.

betterlatethannever

Hi Jack

all i can find on the subject comes from the insolvency service website..quote:
tell your trustee about assets and increases in income you obtain during your bankruptcy. (Note: by law you must inform your trustee of any property which becomes yours during the bankruptcy. Such property includes lump sum cash payments that you may receive, for example redundancy payments, property or money left in a will
You could also ask the OR enquiry line (02072 916895... i think thats the number but check) anonymously about your dilemma.
I'm sure someone will come along soon with some more/better info.
Good luck.

rog2

Yes - I concur with BLTN - However, as a 'redundancy payment' is, in part, designed to assist you in the search for another job, and can, also, be taken into consideration for the calculation of benefits, I don't think the situation is quite as straightforward as it would seem.
Again, you may be well advised to contact either the Insolvency Service OR the Insolvency Helpline (totally different) for clarification.

fermi

I always thought it was treated as just another after acquired asset.

http://www.insolvency.gov.uk/freedomofinformation/technical/techmanvol1/Ch25-36/Chapter31/part7/part2/part_2.htm#12

With regard to redundancy payments, it should be noted that any periodic payments in respect of redundancy represent compensation for loss of a job, and a redundancy payment whether received before or after the making of the bankruptcy order should not be treated as income or be included in an IPA, as it is an asset of the bankruptcy estate and should be realized accordingly. See Chapter 31.5, Monetary assets, paragraphs 31.5.14 and 31.5.15 regarding redundancy payments.

and

http://www.insolvency.gov.uk/freedomofinformation/technical/techmanvol1/Ch25-36/Chapter31/part5/part2/part_2.htm#31.5.14

31.5.14 Redundancy payments.

A bankrupt may argue that as he/she no longer has a job, any redundancy payment he/she receives will be his/her income. Case law has established that a redundancy payment represents compensation for loss of a job: Hindle v Percival Boat Limited [1969] 1 WLR 174, and Wilson v National Coal Board [1981] SLT 67. Although the amount of the payment is related to length of service and to the level of past salary, it does not constitute compensation for loss of earnings. A redundancy payment will be made to an employee dismissed by reason of redundancy, even if that employee immediately secures another job, and even if that job is at higher wages.

31.5.15 Protecting and realising a redundancy payment

A redundancy payment whether received before or after the making of the bankruptcy order should not therefore be treated as income and the possible subject of an income payments agreement or income payments order but as an asset and realised accordingly.
If the bankrupt has not received the redundancy payment at the date of the bankruptcy order, the official receiver should remind the bankrupt that he/she has an obligation under the provisions of section 333 to give the trustee notice should he/she acquire any property and that this includes the receipt of any redundancy payment. This reminder should be confirmed in writing. Where possible, the official receiver should obtain details of the payer, if it is a private employer or the Redundancy Payments Directorate if payment is to be made under the Employment Rights Act 1996, and arrange that the redundancy payment be made directly to the trustee.

I agree, only your OR or the Insolvency Service will be able to answer with any certainty.

rog2

Hi fermi - your post certainly seems to confirm that redundancy payments should be treated as assets and 'realised accordingly'.
I guess, therefore, that the only area for 'flexibility' is in how the individual OR/Trustee 'realises that asset accordingly'.
It's the use of such words that lead to the high range of discrepancy that bankrupts appear to receive from different OR offices.

fermi

rog2 wrote: »

Hi fermi - your post certainly seems to confirm that redundancy payments should be treated as assets and 'realised accordingly'.
I guess, therefore, that the only area for 'flexibility' is in how the individual OR/Trustee 'realises that asset accordingly'.
It's the use of such words that lead to the high range of discrepancy that bankrupts appear to receive from different OR offices.

Yep. I know what you mean rog2.

I interpret 'accordingly' as meaning it should be treated as any other 'after acquired asset', but then I'm not an OR.

The piece of text that prefaces the online version of the 'Technical Manual' just about says it all really......

The “Technical Manual” is intended to be a guide to best practice to be followed by official receivers except when circumstances, including the circumstances of an individual insolvency case, dictate or merit otherwise. For further information, please see chapter 1.10.

While The Insolvency Service tries hard to ensure that the contents of the Technical Manual is as accurate as possible, this will not always be achievable. The contents of the Technical Manual is provided for general information only and it should not be regarded as a full and authoritative statement of the law. You should not rely on it as such. (This warning should be read in conjunction with the disclaimer for all information provided by The Insolvency Service under the publication scheme.)

I especially like the get out clause "....except when circumstances, including the circumstances of an individual insolvency case, dictate or merit otherwise.":rolleyes::rolleyes:

Although, I think redundancy payments may be mentioned explicitly in the IA86 or EA2002 or the Insolvency Rules somewhere. Must get round to looking sometime...