TOUGHER BANKRUPTCY LAWS APPLIED IN MILTON KEYNES

17 Feb 2005 11:45 AM

A former hotelier from Cosgrove has agreed that she was guilty of three areas of 'unfit conduct' in the period leading up to her bankruptcy. Ms Elizabeth Emmett has entered into a Bankruptcy Restriction Undertaking (BRU), which will keep bankruptcy restrictions in place for nine years.

Ms Emmett, who claimed to be able to supply "bargains" was made bankrupt on the petition of three of her creditors who had paid her 96,408 to acquire various vehicles, and a yacht, which she failed to deliver. During the course of his investigations into her bankruptcy, she failed to tell, the Official Receiver in Northampton that she owed a further 157,580 to other creditors, to give any satisfactory explanation of how she had used 96,408 and failed to tell the Official Receiver that while still bankrupt she received and disposed of a further 250,000 which she obtained from a third party.

Desmond Flynn, Insolvency Service, Inspector General and Agency Chief Executive, said:

"The Official Receiver will always seek to establish the reasons for any bankruptcy. During the course of those investigations, dishonest or blameworthy individuals will be identified and restrictions sought in order to protect potential creditors from losses and act as a deterrent to others. This is the first time tougher bankruptcy restrictions have been applied in the region since the introduction of the Enterprise Act. Ms Emmett will now be subject to bankruptcy restrictions for nine years, three times the length of time restrictions would have applied under the previous legislation."

The restrictions Ms Emmett must observe include disclosing her status as a bankrupt if she wants credit of more than 500 for the next nine years.

Changes to the insolvency laws, under the personal provisions of the Enterprise Act 2002, came into force on the 1st April 2004. Bankrupts are now automatically discharged after one year instead of two or three years. However, in the most serious of cases, a bankruptcy restriction order (BRO) could last for up to 15 years.

Elizabeth Emmett, who is currently unemployed,

Notes to Editors
1. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver, to establish why they became insolvent. We also authorise and regulate the insolvency profession; deal with disqualification of directors in corporate failures; assess and pay statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provide banking and investment services for bankruptcy and liquidation estate funds; and advise ministers and other government departments on insolvency law and practice.

2. Under the personal provisions to the Enterprise Act, if an Official Receiver considers the conduct of a bankrupt to be dishonest or blameworthy, he or she will report the facts to the court and ask for a Bankruptcy Restriction Order (BRO) to be made. The court will consider this report and any other evidence put before it and decide whether or not it should make a BRO which could last for a period of 2 to 15 years. The bankrupt may offer the Secretary of State an undertaking (BRU) to be bound by the restrictions for a specified period. This has the same effect as a BRO (and the same consequences if breached) but means the case does not go to court.

3. The restrictions apply to all bankrupts and are lifted on discharge, however, for those subject to either a BRO or BRU, the restrictions remain in place for the period of the order or undertaking. They include: disclosing their status to a credit provider if they wish to obtain credit of more than 500; disclosing their status to potential business partners; acting as a director, insolvency practitioner or receiver or manager. BROs and BRUs are designed to protect the public and the business community against bankrupts whose conduct has been irresponsible or reckless.

For more information about the work of The Service see
www.insolvency.gov.uk

An Executive Agency within the DTI