Q&As

An individual has been made bankrupt, and as usual the case is passed over to the Official Receiver in the first instance. An individual who is an Insolvency Practitioner is also a creditor and, wearing their creditor hat has nominated themselves to be appointed as trustee. Are there regulations (eg IPA) or case law that prohibits acting where there is such a conflict of interest?

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Produced in partnership with Caroline Clark
Published on LexisPSL on 25/11/2015

The following Restructuring & Insolvency Q&A produced in partnership with Caroline Clark provides comprehensive and up to date legal information covering:

  • An individual has been made bankrupt, and as usual the case is passed over to the Official Receiver in the first instance. An individual who is an Insolvency Practitioner is also a creditor and, wearing their creditor hat has nominated themselves to be appointed as trustee. Are there regulations (eg IPA) or case law that prohibits acting where there is such a conflict of interest?

An individual has been made bankrupt, and as usual the case is passed over to the Official Receiver in the first instance. An individual who is an Insolvency Practitioner is also a creditor and, wearing their creditor hat has nominated themselves to be appointed as trustee. Are there regulations (eg IPA) or case law that prohibits acting where there is such a conflict of interest?

This is a situation dealt with in the insolvency Ethics Code for Members, that all IPs are required to follow. The Ethics Code identifies five fundamental principles with which IPs are required to comply:

  1. integrity

  2. objectivity—conflict of interest or undue influence should not be allowed to override professional judgement

  3. professional competence

  4. confidentiality

  5. professional behaviour—IPs should avoid action that discredits the profession

The fundamental principles likely to be most affected by this situation are objectivity and professional behaviour.

An IP should take care to identify

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