Bankruptcy Restriction Orders (“BROs”)
Bankruptcy Restriction Orders (“BROs”)
Introduction
A BRO can be applied for within one year of the Bankruptcy Order being made or after one year with the permission of the Court.
Only the Official Receiver or the Secretary of State can make an application to Court for a BRO.
The Official Receiver will usually determine whether a BRO is necessary during the course of their investigation into the Bankrupt’s affairs.
Some examples of conduct that the Official Receiver may consider to be dishonest, reckless or otherwise blameworthy include:
- Incurring debts that you knew you had no reasonable chance of repaying
- Giving away assets or selling them at less than their value
- Deliberately paying off some creditors in preference to others
- Failing to keep or produce records that would explain a loss of money or property
- Fraud or fraudulent breach of trust
- Carrying on business when you knew or ought to have known you could not pay your debts
- Failing to cooperate with the Official Receiver/Trustee
- Undischarged bankrupt in previous six years.
- Gambling or making rush speculations or being unreasonably extravagant.
- Failing to supply goods or services that have been paid for.
Effects of a BRO
The duration of a BRO or BRU which will be determined in accordance with the seriousness of the conduct.
The Bankruptcy Restrictions that will be extended by a BRO or BRU include:
- You lose control of your assets (house, savings, expensive car (over £2,500))
- You cannot obtain credit for over £500 without declaring that you are bankrupt
- You cannot take any part in the promotion, formation or management of a Limited company, without the permission of the Court
- You cannot trade in any business under any other name unless you inform all persons concerned of the Bankruptcy.
- You will be excluded from certain professions such as Solicitor, Estate Agent, Stock Broker, pub licensee, Chartered Accountant.
Details of the BRO will be entered into the public register and will remain there until the Order has expired.
Failure to comply with the Bankruptcy restrictions whilst subject to a BRO or BRU is a criminal office permissible by a fine, imprisonment or both.
Also if you take part in the management of a company without the High Court’s permission whilst subject to a BRO or BRU you will be personally responsible for any debts of that Company that arise whilst you were in management.