Official Receivers Powers

[Davypops]

I filed for bankruptcy last August with debts of £28,000, all on credit cards. (I know, stupid). I deal in antiques and artefacts. Not always my own stuff - I borrow things off other dealers I know well, and pay them when I've sold them. Anyway - in May (3 months before bankruptcy) I borrowed some things on sale or return from a dealer and sold them to another dealer. He gave me a cheque for £3365 which I banked and paid the dealer when it had cleared. Now, the Official Receiver is suggesting that me paying the dealer was treating him as a "Preferential creditor" (ie preferred to Credit Card debts). I am sure the Official Receiver is wrong as I didn't pay for the goods in the first place - merely borrowed them and paid when I got paid. Can the Off. Rec. claim the money off the dealer? I understand it might be the case if I had a straight forward "loan" of money and then paid them back ahead of other debts - but this isn't like that. Any advice very welcome, thank you.
Please - can anyone say how I should deal with this. Surely he was never a creditor in the first place. Thank you.

[cathfromsaron]

surely you should engage a solicitor and have a meeting to discuss all these issues?

[HowardKennitby]

If you received money from trading after having been declared bankrupt that should have gone to the receiver, as far as I know.
It seems to me that you were given an unsecured loan, albeit in the form of goods, and that lender will be bottom of the pile.
If you were declared bankrupt at the time how were you able to access the account to make the payment?

[NOX]

No, you need top pitch it to them that you acted as an agent, the goods never be;onged to you in the first place and you took a comission to sell them, giving the reaminaing purchase fee to the rightful owner. I don't think you've breached anything in doing that- you are simply working, not borrowing anything, not being loaned anything- simply acting as an agent.

[NOX]

Sorry about the typos- I have a brain injury and somtimes words look fine one minute and then not the next- I can spell, honest lol :(

[HowardKennitby]

Nox

Your version may hold good as long as the Receiver has not heard the word 'borrowed' from OP. I think it may also depend on how charitable the Receiver is.
Still don't see how a bankrupt can be operating a bank account like this though.

[ojread2]

Howard, if you read the OP again, it says this happened 3 months BEFORE bankruptcy, not after
After all, we're only in April, not May ;-)

[factor-fiction]

I am not sure 'borrowed' is the right term. It seems you were just acting as an agent.
Anyway, did you bank the cheque before or after you had you been declared bankrupt? If before then I don't see why the Official Receiver is concerned about it. If you did it afterwards then Howard's point about having a bank account may be valid.

[tonywiltshire]

I understand you were declared bankrupt in August 2011, and this transaction occurred in May 2011. You are trading as an individual, have a number of debts, few or no assets or equity in your home and will not need credit soon and you are unlikely to inherit property in the near future. Hopefully you took professional advice before becoming bankrupt, which is not the easy way out many people believe it to be as you are deprived of the ownership of your estate.

I do not understand why the Official Receiver, acting as trustee, would be involved in a normal business transaction, which took place three months before you were declared bankrupt, it would not have been included in the statement of affairs when you petitioned the court and the OR would not have been notified until the bankruptcy order was made in August 2011. Were any bankruptcy restrictions applied or is there an investigation proceeding that could lead to a BRO or BRU?

[Davypops]

Hello Tony Wiltshire. Thanks for your reply. I had an interview with the OR about 2 weeks ago and their concern is (a) "what did I do with the £3365 I received for goods I bought". (b) "Where did I get the money from to even do the purchase in the first place ?" Well, I used the money I had received from the previous deal to do this one in question - banked the cheque then paid the original dealer. So, in effect I used the "float" I had to do an inbetween deal. Shouldn't be any concern to the OR I thought...?

[factor-fiction]

.... that sounds a bit dodgier to me now, Davypops, unless I've misunderstood. By conducting business in this way what would have happened if the last person who lent you the goods asked for his item back from before you'd sold it? Maybe the OR is saying why were you still transacting in this way you hadn't the funds to settle up. Sorry if I have misunderstood

[NOX]

This is a common scenario in antique dealing circles though Factor- if he hadn't sold it he'd have just given it back to them surely? If he sells it he takes his ocmmission and pays em out of the money he sells it for, and if he doesn't they simply have the item back. I really can't see why there is a fuss being created by the OR, it's about the most common scenario I can think of. I have about 8 antiquarian books at the moment dealt with in this way, it's very common.

[factor-fiction]

I got the impression, NOX, that he was always a transaction behind- he couldn't pay A for the item he had sold on A's behalf until after he had sold the item he had borrowed from B.
Maybe I've misunderstood.

[tonywiltshire]

I agree that it should not be something the OR should be involved in if it occurred three months, or so before you were declared bankrupt. You must be coming close to being discharged from bankruptcy by now so do make sure you co-operate with the OR and explain this transaction. Remember the OR can claim you are failing to co-operate in which case the court may extend the period before you are discharged or have conditions applied, which I assume you would not want.

[themas]

1. Can you please explain what you mean by this:

"Well, I used the money I had received from the previous deal to do this one in question - banked the cheque then paid the original dealer. So, in effect I used the "float" I had to do an inbetween deal"

2. Your OP seems quite clear - you took some goods from another dealer on a sale or return basis without paying him; you sold them; you banked the cheque for the payment you received; you then paid the dealer whose goods they were.

3. If that account is correct I don't see how the bit I've put in quotes in 1 above relates to it - it gives the impression something else happen which muddied the waters.

4. If the account in 2 above is correct then it seems to me you just have to explain to the OR that that is what happened & get the other dealer to confirm it. He was not a creditor because you would have returned the goods to him if you had not sold them. You did not own them, so - even if you still had them when you became bankrupt - they would not have formed part of your bankruptcy estate.

[Davypops]

Thanks all for your responses, very helpful.