Owed money from a bankrupt or a company in liquidation

The early stages of a bankruptcy or compulsory liquidation are usually handled by the official receiver (OR). If there are significant assets, an insolvency practitioner (IP) may be appointed as trustee/liquidator in place of the OR.

The OR is a civil servant at the Insolvency Service and an officer of the High Court. The Insolvency Service is responsible for dealing with financial failure and misconduct through the OR. As well as administering cases, the OR has a duty to investigate the affairs of individuals in bankruptcy and companies in compulsory liquidation.

IPs are licensed insolvency specialists who work in the private sector - usually as accountants or solicitors. By law, they must be authorised to act as IPs. They handle all other insolvency procedures except fast-track voluntary arrangements and debt relief orders. To find out more see individual voluntary arrangements, administration orders and debt relief orders.

Both the OR and IPs are legally required to report unfit conduct to the Directors Disqualification Unit of The Insolvency Service. They will then decide whether or not to begin court proceedings to disqualify the director or extend the restrictions on a bankrupt.

The trustee in bankruptcy is the OR/IP who takes control of the assets. The trustee's main duties are to sell these assets and share out the money among the creditors.

The liquidator is the OR/IP appointed to administer the liquidation of a company or partnership.

Trustee or liquidator payment

Payment - known as remuneration - the OR acting as trustee/liquidator is specified under insolvency law.

If an IP is acting as trustee/liquidator, the remuneration can be fixed as a percentage of the value of the assets realised - sold - and distributed, or on a time basis. If creditors don't agree a remuneration, the IP gets the same amount that would have been paid to the OR - unless the IP applies to court and arranges a higher amount.