An order obtained from a court by the creditors of an insolvent debtor. The effect of the order is to put the official receiver in charge of the debtor’s estate. The Receiver summons creditors’ meetings, and if no scheme can be found which is satisfactory to both them and the court, application is made to the court to have the debtor declared bankrupt. A receiving order against a firm applies to all partners jointly and severally. A sealed copy of any receiving order is sent to the Official Receiver, who serves another sealed copy on the debtor. The registrar of the court gives notice to the Department of Trade and Industry. The Official Receiver gives notice to a local paper and to the Chief Land Registrar. The receiving order is also published in the London Gazette.
The receiving order has three principal consequences: (1) though the Official Receiver does not become the owner of the debtor’s property, the debtor cannot dis¬ pose of any of his property prior to adjudication and may be deprived of possession; (2) remedies enjoyed by creditors with provable debts are barred (this does not apply to secured creditors); (3) actions or proceedings against the debtor’s property are stayed.
The order may be rescinded for various reasons. For instance: (1) the court may agree to a scheme which is also acceptable to the creditors; (2) the creditors may be paid in full; (3) it may be decided that the order should not have been made because (a) the debtor is an undischarged bankrupt and has no assets, (b) he has no prospect of acquiring assets, (c) he is a professional bankrupt, or (d) the creditors assent.
|Reference: The Penguin Business Dictionary , 3rd edt.|