Bankruptcy Restriction Order

• Restrictions
• Non-compliance

A Bankruptcy Restrictions Order (BRO) can be made by the AiB or the sheriff where a client behaves inappropriately before or after the date of sequestration.1Part 13 B(S)A 2016

BROs were introduced to deter clients from misbehaving or being dishonest and to provide businesses and creditors with a level of protection. A BRO can help ensure that those who abuse the bankruptcy process face the consequences of their actions. This can include an appearance in front of a sheriff if the AiB deems the client’s behaviour has been exceptionally serious.

It is normally made after the date of sequestration and before the discharge of the client (six months), but can be made after this time on application to the court by the AiB.

There are two time limits for this.

•Where the AiB make the order, it can last for between two and five years for less serious cases.
•Where the sheriff makes the order, it can last for between five and 15 years for more serious cases.

Trustees (or agents) have a duty to report any misconduct to the AiB.

What can be deemed as misconduct?

– Not co-operating with your trustee during the period of your bankruptcy.

– 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.

– Gambling or making rash speculations or being unreasonably extravagant.

– Failing to keep or produce records that would explain a loss of money or property.

– Fraud or a fraudulent breach of trust.

– Causing your debts to increase by neglecting your business affairs.

– Failing to supply goods or services that have been paid for.

– Carrying on a business when you knew or ought to have known that you could not pay your debts.

– Failing to supply accurate information for the granting of a certificate for sequestration.

 

1     Part 13 B(S)A 2016 »

Restrictions

During the BRO period, the following restrictions apply.

•The client must disclose to a credit provider that they are subject to a BRO if they (alone or jointly with another person) wish to get credit of more than £2,000.
•The client must disclose to a credit provider that they are subject to a BRO if they wish to get credit of any amount and already have debts of £1,000 or more.
•The client must disclose to those they wish to do business with the name (or trading style) under which they were made bankrupt.
•The client cannot act as the director of a company or take part in its promotion, formation or management unless they get the court’s permission to do so.
•The client cannot act as an insolvency practitioner or as the receiver or manager of the property of a company on behalf of debenture holders.

There are other restrictions that restrict jobs or positions a client can be appointed to.

The restrictions apply after the client has been discharged from bankruptcy for a further period of between two and 15 years, depending upon the level of the client’s misconduct or dishonesty before and during their bankruptcy.

Where a BRO is being considered by either the AiB or the sheriff, they must inform the client who has 14 days to reply why the BRO should not be awarded.

Once the BRO is made, the client can apply to the court to have the BRO cancelled or the terms varied.

Non-compliance

If a client fails to comply with a BRO, they can be brought to court and ultimately they can face imprisonment.