A person made bankrupt under the provisions of the Insolvency Act 1986 (“the Act”) has a legal duty to cooperate with the Official Receiver and Trustee in Bankruptcy and is under strict legal duties to disclose the extent of their assets and liabilities. The Acts sets out the penalties for non-compliance; Section 354 clearly states that concealment carries a penalty of fine or imprisonment (or both) and is a criminal offence.

The subject of this cautionary tale, a Mr Goni, was declared bankrupt and actively chose not to disclose to the Official Receiver the true extent of his assets. The Official Receiver sought criminal sanction and found favour with the Courts. Indeed, the Courts went a step further and decided that the Proceeds of Crime Act 2002 applied to the offence and that the Court were entitled to make a Confiscation Order. An Order was granted to the tune of c£2m, that being the value of the assets so concealed and therefore the value of the “benefit” of his criminal activities.

You might think that there is not much that surprising in this so far, but when I tell you that the extent of Mr Goni’s debts and costs of the Bankruptcy was less than £500k and that these were paid in full from confiscated funds under the Order, you might, quite reasonably, wonder what happened to the remaining £1.5m?

And the answer is… he lost it.

A Confiscation Order is a penalty for a crime, rather than a tool for recovery for insolvency purposes. In this case, the Order was made post-Bankruptcy in respect of assets that had already vested which meant that the Bankruptcy Estate had first call on them, but once the bankruptcy debts and costs had been paid in full, the balance was remitted to the Crown.

The moral of the story is that honesty really is the best policy… as is taking advice. Disclosure of the assets at the outset to the OR, his Trustee or another adviser would have resulted in advice to consider annulment, or an IVA and the outcome for Mr Goni could have been very different and much less costly.

Danny Allen

Senior Manager


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