Bankrupt Harrogate
business man spared jail after hiding assets from creditors
Harrogate
Magistrates Court spared Mr Terence Shane Hutchinson of West End
Avenue, Harrogate, jail today when he pleaded guilty to putting
his assets beyond the reach of his creditors, contrary to
bankruptcy law. The hearing followed investigations by The
Insolvency Service and The Department of Business Innovation and Skills.
On 4 January 2010 Mr Hutchinson, a director of Clean-It Contracts
of Harrogate, was made bankrupt for debts exceeding £146,000.00
that he could not pay. As with all cases of financial failure the
Official Receiver (an officer of The Insolvency Service)
investigated the cause of Mr Hutchinson’s bankruptcy and
discovered that between his house being sold on 20 October 2009
and him being made bankrupt on a creditors petition on 4 January
2010 Mr Hutchinson, while insolvent, disposed of £58,540.00 to the
determent of his creditors.
Agreeing his action was detrimental to his creditors Mr
Hutchinson signed a nine year Bankruptcy Restriction Undertaking
in August 2010, meaning the restrictions by which he must abide by
as a bankrupt have been extended beyond the normal 12 months.
Mr Hutchinson faced criminal charges, brought by the Department
of Business Innovation and Skills for his action of fraudulently
disposing of his assets (his house) contrary to section 357(1) of
the Insolvency Act 1986. The court heard that while he had
outstanding judgements against him, and to the determent of his
creditors, he spent nearly £22,000 (the proceeds from the sale of
his house) on a holiday in London, a school skiing trip for his
daughter, shopping on the high street and a BMW X5.
Mr Hutchinson was sentenced to four months imprisonment –
suspended for 12 months. In addition he must complete 240 hours of
unpaid work as part of a 12 month Community Order and must pay a
contribution to prosecution costs of £750.
Notes to Editors
1 The Department for Business, Innovation and Skills prosecutes
a range of criminal insolvency cases in magistrates and Crown
courts across the country. Most of the cases are referred by The
Insolvency Service. 2 What is the role of the Official Receiver?
When a court has made an insolvency order (a personal bankruptcy
against an individual or a winding-up order against a company) the
Official Receiver, a civil servant of The Insolvency Service with
wide ranging statutory powers to obtain information, is
responsible for collecting and protecting any assets for the
benefit of creditors. When the Official Receiver thinks there is
cause to do so they can also investigate, in the public interest,
the conduct and financial affairs of the bankrupt for the period
leading up to the insolvency order being made. 3 What are
Bankruptcy Restrictions? These are restrictions set out in
insolvency law that the bankrupt is subject to until they are
discharged from bankruptcy – normally 12 months and include that
bankrupts:-must disclose their status to a credit provider if they
wish to get credit of more than £500;who carry on business in a
different name from the name in which they were made bankrupt,
they must disclose to those they wish to do business with the name
(or trading style) under which they were made bankrupt;may not act
as the director of a company nor take part in its promotion,
formation or management unless they have a court’s permission to
do so; may not act as an insolvency practitioner, or as the
receiver or manager of the property of a company on behalf of
debenture holders; may not be a Member of Parliament in England or
Wales. 4 What are Bankruptcy Restrictions Orders and Bankruptcy
Restrictions Undertakings? If the Official Receiver considers that
the conduct of a bankrupt has been dishonest or blameworthy in
some other way, he (or she) will report the facts to court and ask
for a Bankruptcy Restrictions Order (BRO) to be made. The court
will consider this report and any other evidence put before it,
and will decide whether it should make a BRO. If it does, the
bankrupt will be subject to certain restrictions for the period
stated in the order. This can be from 2 to 15 years. The bankrupt
may instead agree to a Bankruptcy Restrictions Undertaking (BRU)
which has the same effect as an order, but will mean that the
matter does not go to court. 5 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. The Service also
authorises and regulates the insolvency profession; deals with
disqualification of directors in corporate failures; assesses and
pays statutory entitlement to redundancy payments when an employer
cannot or will not pay employees; provides banking and investment
services for bankruptcy and liquidation estate funds; and advises
ministers and other government departments on insolvency law and
practice. Further information about the work of The Insolvency
Service is available from http://www.insolvency.gov.uk
Contacts:
Denise Rawls.
Phone: 020 7674 6910
denise.rawls@insolvency.gsi.gov.uk
Ade Daramy
Phone: 020 7596 6187
ade.daramy@insolvency.gsi.gov.uk