Official Receiver runs out of funds to prosecute
A lack of funds will see director disqualifications halted until next April, DTI insiders have claimed
The Official Receiver – the investigative arm of the Insolvency Service – has
found itself in the extraordinary position of running out of funds to process
director disqualifications. It will have to wait until the new financial year to
resume the process.
The claim has emerged after MP Jim Fitzpatrick revealed new funding
arrangements for the Official Receiver, which will see the cost of
investigations offloaded onto creditors.
The body oversees all bankruptcies, and it will be funded by estates rather
than from general tax revenues in future. Some money is already taken from
estates as a set cost, with the value set to rise.
In a written ministerial statement Fitzpatrick said the cost of investigation
work undertaken by official receivers and their staff on disqualifications,
bankruptcy restriction orders and on reporting possible criminal offences, would
not be met by a programmed expenditure. Instead it will be recovered through
fees charged to estates.
Disqualification and bankruptcy restrictions were expected to ‘rise
significantly’ in 2007/2008, Fitzpatrick added.
‘They’ve run out of money, but that won’t happen in the future,’ said one
source.
A source claimed the amount charged to estates by the Receiver as a result of
the changes could jump from £350 to more than £1,500.
A spokeswoman for the Insolvency Service said there were funds to continue
investigating cases and and bring disqualification proceedings, but added:
‘There are resource constraints. There are 500 cases that practitioners have
initiated. We estimate that 50% would not have resulted in disqualification
proceedings. The policy on asset recovery has not changed and the increase on
fees does not relate to asset recovery.’