2. The requirements in respect of security or caution for the proper performance of the duties of insolvency practitioners prescribed for the purposes of section 390(3)(b) shall be as set out in this Part.
3.—(1) Where an insolvency practitioner is appointed to act in respect of an insolvent there shall be in force a bond in a form approved by the Secretary of State which—
(a)contains provision whereby a surety or cautioner undertakes to be jointly and severally liable for losses in relation to the insolvent caused by—
(i)the fraud or dishonesty of the insolvency practitioner whether acting alone or in collusion with one or more persons; or
(ii)the fraud or dishonesty of any person committed with the connivance of the insolvency practitioner and
(b)otherwise conforms to the requirements of this Part.
(2) The terms of the bond shall provide—
(a)for the payment, in respect of each case where the insolvency practitioner acts, of claims in respect of liabilities for losses of the kind mentioned in sub-paragraph (1) up to an aggregate maximum sum in respect of that case (“the specific penalty sum”) calculated in accordance with the provisions of this Schedule;
(b)in the event that any amounts payable under (a) are insufficient to meet all claims arising out of any case, for a further sum of £250,000 (“the general penalty sum”) out of which any such claims are to be met;
(c)for a schedule containing the name of the insolvent and the value of the insolvent's assets to be submitted to the surety or cautioner within such period as may be specified in the bond;
(d)that where at any time before the insolvency practitioner obtains his release or discharge in respect of his acting in relation to an insolvent, he forms the opinion that the value of that insolvent's assets is greater than the current specific penalty sum, a revised specific penalty sum shall be applicable on the submission within such time as may be specified in the bond of a cover schedule containing a revised value of the insolvent's assets;
(e)for the payment of losses of the kind mentioned in sub-paragraph (1), whether they arise during the period in which the insolvency practitioner holds office in the capacity in which he was initially appointed or a subsequent period where he holds office in a subsequent capacity;
(3) The terms of the bond may provide—
(a)that total claims in respect of the acts of the insolvency practitioner under all bonds relating to him are to be limited to a maximum aggregate sum (which shall not be less than than £25,000,000); and
(b)for a time limit within which claims must be made.
4. Subject to paragraphs 5, 6 and 7, the amount of the specific penalty in respect of a case in which the insolvency practitioner acts, shall equal at least the value of the insolvent's assets as estimated by the insolvency practitioner as at the date of his appointment but ignoring the value of any assets—E+W+S
(a)charged to a third party to the extent of any amount which would be payable to that third party; or
(b)held on trust by the insolvent to the extent that any beneficial interest in those assets does not belong to the insolvent.
5. In a case where an insolvency practitioner acts as a nominee or supervisor of a voluntary arrangement under Part I or Part VIII of the Act, the amount of the specific penalty shall be equal to at least the value of those assets subject to the terms of the arrangement (whether or not those assets are in his possession) including, where under the terms of the arrangement the debtor or a third party is to make payments, the aggregate of any payments to be made.E+W+S
6. Where the value of the insolvent's assets is less than £5,000, the specific penalty sum shall be £5,000.E+W+S
7. Where the value of the insolvent's assets is more than £5,000,000 the specific penalty sum shall be £5,000,000.E+W+S
8. In estimating the value of an insolvent's assets, unless he has reason to doubt their accuracy, the insolvency practitioner may rely upon—E+W+S
(a)any statement of affairs produced in relation to that insolvent pursuant to any provision of the Act; and
(b)in the case of a sequestration—
(i)the debtor's list of assets and liabilities under section 19 of the Bankruptcy (Scotland) Act 1985 M1;
(ii)the preliminary statement under that Act; or
(iii)the final statement of the debtor's affairs by the interim trustee under section 23 of the Bankruptcy (Scotland) Act 1985.
Marginal Citations