Help with bankruptcy complaint

tfrz

Introduction

 Hello, I’m writing on behalf of my parents who were made bankrupt in mid-2017. The reason I am writing is due to the conduct of the company appointed as the insolvency practitioner (I will not mention their name but will refer to them as IP) which I will detail further below. There is a large number of issues relating to how the IP has behaved and it is only recently that I became aware of the full situation, which is why I am now looking for some help as to how we can make a complaint before we potentially take this further.

  

Background

Prior to going bankrupt, my parents owned a small local business for many years. However, over the last 10 years or so my dad has had several health issues including having a mental breakdown and a number of strokes. As a result of this my mum had to run the business on her own whilst caring for my dad. At this time the business was also subjected to a large-scale theft, resulting in a constant struggle for my mum to save the business, and unfortunately tax matters were neglected.

As such my parents were declared bankrupt in mid-2017. Shortly after this time the IP instructed the sale of their home of over 25 years making them homeless. My parents were discharged from bankruptcy in mid-2018, although they were never directly informed of this by the IP and had to find this out from the Insolvency Service directly. Since losing their house they had essentially been living week-by-week in various holiday lets or camping on their farmland as they were unable to find a longer-term option such as rented accommodation.  

However, 2 months ago, my dad had an accident and unfortunately he passed away shortly after this accident. In the weeks that followed my mum did not look after herself very well (I live a significant distance away so was unaware of this) and as a result of this she had a seizure and was admitted to ICU. Fortunately, she was released a couple of weeks ago and is doing much better now.

However, since the passing of my dad and my mum being ill, my mum and I have become much closer whilst I try to help her to recover, including finding rented accommodation. However, it is only in this time that I have come to understand the full details of the past few years, including quite how disgraceful and unacceptable the conduct of the IP has been towards my parents, hence why I am now trying to help and why I am posting here. I certainly believe that their actions and behaviours has contributed to the deterioration in my parents’ health.

 

IP behaviour 

Since being made bankrupt my parents have had their lives made completely miserable by the IP, who I believe at no stage considered that they are both elderly and vulnerable, particularly my dad who had reduced mental capacity after his stroke, and was unable to write or speak coherent sentences. He certainly struggled to understand the gravity of the situation, which ultimately meant that my mum had to deal with the whole situation again. It is also important to note that all dealings the IP had with my parents were conducted with threatening language and behaviour.

 When my parents were initially made bankrupt, they attended a hearing, however they did not receive any copies of any documentation. They were also not offered any help or guidance, nor could they afford legal representation. The IP was aware of this but despite it being incumbent on them to ensure my parents were not disadvantaged they did not help in any way.

 During my parents’ bankruptcy, the IP did not carry out any stock take or provide an inventory of their business. In addition, they took various items away on multiple occasions but provided no evidence or receipt of what these were. Furthermore, at no stage did the IP even attempt to advertise the business or the lease for it to be taken over, despite my parents receiving plenty of interest of this over many years. In addition, the IP collected less than 25% of the amount owed to the business by debtors, and there is evidence of them actively not collecting these funds.

 With regard to my parents’ house, the IP originally instructed separate estate agents to value and advertise the property. However, these estate agents were not local to the area and were based 70 miles away, and had never sold a property in my parents’ area before. Eventually the IP listened to my parents and used a local estate agent who knew the area; however, the new agent was explicitly instructed by the IP to not speak to my parents or carry out a valuation whilst they were at home. In addition, the IP then instructed the estate agent to lower the valuation by £50,000 to “get interest in the property”. Furthermore, the IP conducted the sale of my parents’ house shortly before Christmas when it would be harder for my parents to find any alternative accommodation and when the housing market slows down.

 To arrange the sale of the house, the IP used solicitors they knew as associates rather than impartial ones. As such, the conveyancing fees were over £6,000, however these fees should have been no more than £2,000 at most.

 At this time, the IP also visited the house but did not carry out any valuations of any of their possessions. My mum informed them of the existence of three expensive paintings, one of which she had previously received an offer of £25,000. This was subsequently taken by an HMRC representative and sold at a non-specialist auction without reserve, and we are not aware of the price it obtained.

 With regard to my parents’ farmland (this is separate to the house), the IP lied by stating to my parents they had arranged the sale of their animals to a registered breeder; however, they had actually arranged for the animals to be sold to a slaughterer. I believe the IP has been unable to sell the land due to it being jointly-owned by my parents at the time. However, the IP has threatened my parents to sell this land despite there being no obligation to do so, and this is even after they have been discharged from bankruptcy. The IP also trespassed on the land and threatened individuals who were renting stables, which has subsequently deprived my parents of their only income.

 Since being made bankrupt, my mum has repeatedly requested a breakdown of accounts including evidence or proof of what has been paid or received by the IP. However, to date (over 3 years), she has only received two very basic bookkeeping-style pages (one for her and one for my dad) which just state total receipts and payments (i.e. with no evidence of any of these figures). These pages are also grossly incomplete and full of anomalies. For example, my parents were joint partners in everything but the figures provided for both of them are not even close to being equal.

 Furthermore, the IP has never provided evidence of what fees they charge despite my parents requesting this on several occasions, which I believe they are duty-bound to provide. My parents have never even received confirmation that HMRC (the only creditor) has been paid or how much was paid to them, nor have their tax returns been completed by the IP.

 Finally, my parents never received confirmation from the IP that they had been discharged from bankruptcy in mid-2018, and instead had to find this out directly by asking the Insolvency Service. Since being discharged, the IP is still acting towards my parents and 3rd parties as if they are still under bankruptcy, as well as still holding on to all of their remaining funds. These funds would enormously help my mum at this time.  

 

Questions to help us

 If you have made it this far, thank you! I hope I have been able to show the IP has demonstrated a complete lack of basic courtesy, ethical and moral behaviour towards my parents, and that the care and competence applied to the administration, communication and management of my parents’ bankruptcy has been totally unacceptable.

 With all that being said, my mum and I have numerous questions regarding my parents’ bankruptcy, in no particular order. We would appreciate any information whatsoever you might be able to provide, including any answers to any of the questions below:

 

- Are we required to inform the IP of my father’s death, although my parents have already been discharged from bankruptcy? Will this have any impact on administering his estate? (e.g. will the farm be owned by my mum and my dad’s estate?)

 - What should happen to the land after my father’s death (which was jointly owned with my mum)? If the IP finds out my dad has died can they do anything to the land including selling it?

 - Is it possible to transfer the land into joint names between my mum and I?

 - The IP is required to comply with the Statements of Insolvency Practice, however there are numerous examples of them not doing so e.g. no detail being provided about the IP’s remuneration or account reports being provided. What would the consequence of this be?

 - There are other clear failures by the IP under The Insolvency Service to: (i) realise the assets of an individual in bankruptcy for the best possible price and (ii) disposing of assets at the highest possible price to maximise the amount available”. What would the consequence of this be?

- Is there any possibility the IP has contravened the Human Rights Act (e.g. humiliating and degrading treatment, or causing disadvantage which would not be suffered by a person of full capacity)? If so, what would the consequence of this be?

 - Are we entitled to ask for a full copy of all accounts including payments and receipts and evidence of these? What happens if the IP continues to refuse to provide these?

 - Is there a standardised complaint procedure for insolvency practitioners? If so, is this something we request this from the IP?

 - Could we expect to recover as much money as possible? In addition, could we expect any compensation or reimbursement as well as an apology?

- The IP is currently retaining approx. £100k of funds despite my parents being discharged, with no reason provided as to why they are still doing so. What should have happened with these funds after my parents were discharged, and what might be happening with them now?

- What are Secretary of State fees (these were detailed in the basic account sheets my parents received)? These total tens of thousands of pounds; how do these arise and how are they calculated? 

- Should the individuals administering my parents’ bankruptcy be qualified insolvency practitioners (JIEB)? What would the consequences be if they were not fully qualified?

- In order to make a full complaint, is there any information that we could legally request from the IP that might help us, such as under the Freedom of Information Act, or by making a GDPR data subject access request? If so, what could we reasonably request from the IP? For example, could we request copies of all correspondence between the IP and my parents?

- Are insolvency practitioners required to follow the FCA client assets (CASS) rules?

 

My mum and I believe that we are required to make a complaint directly to the IP before we can take any further action. Assuming that the IP does not take us seriously and does not respond satisfactorily to our complaint, we intend to take legal advice to carry this forward. However, any further information on how to complain, or other bodies who might be interested in hearing our complaint, or just any other information in general, would be massively appreciated. 

Thank you very much for taking the time to read my post and for any help you may be able to provide.

sourcrates

Hi,
You would be better off running your case past National Debtline, or on the Legal Beagles website.
This is a very complex area of insolvency law, only a qualified individual could give you any insight into this.
In bankruptcy you have an official receiver, if you are not satisfied with any aspect of the service you have received, then make a complaint.

luvchocolate

Totally agree with sourcrates this is a very complex case and needs professional help. 
I will add you're not normally notified of discharge. 
My statement from my trustee was very detailed 

BillEatsCrisps

Hi. Sorry for how upsetting this has clearly been for you. 

The IP has a duty to report annually to the creditors and this will

Include details of the assets realised and amounts and details of the costs and expenses paid from the bankruptcy estate, including the amount of trustee’s fees, but they do not have a duty to give these annual reports to the bankrupt. Of course you can ask for a copy. 

Secretary of State fees are a government fee levied on all bankruptcy cases. At the time of your parents’ bankruptcies, this was calculated as a percentage of asset realisations so yes can run into tens of thousands. 

The IP has no duty to inform the bankrupt of discharge and it needs to be noted that discharge is not the same as the bankruptcy case being closed. Discharge just means that you are no longer under the restrictions of bankruptcy (re being a company director or taking on debt again) but if there are still assets to be realised or claims to be dealt with or if the trustee’s investigations are still ongoing, he will

Continue with that. 

Do you know roughly how much the creditors were owed compared to how much the assets might have been realised for? It would only be in an extremely rare case where creditors were paid in full plus 8% interest on their claims after all of the costs and expenses (trustee fees, agents, Secretary of State) that there would be any kind of surplus that might be returned to the bankrupt, but that would be so rare. 

Minkym00

To add to Bill’s answers, the IP is the trustee of your parent’s estate until they are released. If there are complex asset matters to be dealt with this could take several years - it does not end when the bankrupt is discharged, it ends when all asset matters have been concluded. You absolutely need to tell them that your father has passed away and provide a copy of any will.

Any land that was an asset of your father’s remains an asset in his bankruptcy until it is realised.  You cannot transfer it your name as, in any case, there will be a bankruptcy restriction placed at Land Registry in favour of the trustee (IP).

You can request interim accounts so keep on at them. But you will be shocked by the amount of their renumeration, so be prepared. I honestly doubt much would come of a complaint about this though, as it has not caused a material loss. Yes, you can request copies of all correspondence, but be aware that they will just add the cost of this onto their fees.

What may have caused a material loss though is selling assets for less than they are worth. On this issue though you may need to be more circumspect. Their role is to realise assets with the minimum of effort and cost, they will not sit on houses for months and months, they will try and offload them as soon as possible. Even more so with farm animals. As for collecting debts, creditors just refuse to pay (they know they are not dealing with a business or people they know by now) and, unless it’s worth litigating, the IP will just write it off. All assets realised should be in the interim report.

Unless all debts and fees have been paid the IP will hold on to any funds. I appreciate that you have no idea what has been realised and how much for at this time, but it’s unusual that there will be anything left over. The Secretary of State fees are 15% of all realised assets, so you can see how it racks up.

You can complain about an IP here https://www.gov.uk/complain-about-insolvency-practitioner but not only are you very close to this, you also (with all due respect) don’t have the knowledge of what an IP can and can’t do. They have a role to do that can certainly seems inhumane if it’s happening to you or someone you love. Doesn’t make it illegal or improper though. They have complete control over the bankrupt’s financial affairs and it’s basically a fire sale and they will get whatever they can for the minimum of cost/effort. They must be registered though and, given that this is an HMRC case, they will have been the next ones on the IP rota.