This section holds useful information regarding debt questions and bankruptcy questions.

Moderators: TalbotWoods, JaneClack

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By Ransid
#71869 ======================================

BRO's / BRU's

When someone goes bankrupt they are put under restrictions regarding their future activity until they get discharged (normally 12 months later - or earlier). These include restrictions on the obtaining of credit and running a business. More information about these restrictions can be found in the OR's leaflet "A guide to bankruptcy"
http://www.insolvency.gov.uk/guidancele ... ruptcy.htm

The Official Receiver is appointed following bankruptcy and one of his/her tasks is to investigate a bankrupt's conduct and affairs in order to ascertain whether or not they have been "culpable, reckless or dishonest", and/or have brought the bankruptcy upon themselves.This "investigation" may be cursory (eg just based on the paperwork) or more in depth, involving an interview or interviews. In a small percentage of cases this investigation warrants action being taken against the bankrupt to seek to continue the restrictions upon the bankrupt beyond discharge. This process is called a "Bankruptcy Restrictions Order" (BRO) or, if agreement can be reached between the bankrupt and the OR, a "Bankruptcy Restrictions Undertaking" (BRU). The former is an Order from a Judge, the latter is a signed agreement between the bankrupt and a representative of the Secretary of State for Trade & Industry. The benefit of the latter is that the OR will reduce the tariff (period) if a BRU is agreed against what is sought from a Court at a hearing. Just because the OR makes an application for a BRO it's not a done deal - he still has to convince a judge it's appropriate. Like any court action these can be defended and mitigated against, and, if found/proved, the period is a matter for the Judge anyway - and may be longer or shorter than indicated by the OR.

Breaches of a BRO/BRU are a criminal offence, just like breaches of a bankruptcy restriction before discharge.

The purpose of getting a BRO/BRU is to protect "the public" in the future and to act as a deterrent in respect of future conduct. It must also be deemed to be in the public interest to seek one.

The following is a link to the OR's leaflet explaining this issue further.
http://www.insolvency.gov.uk/guidancele ... ro/bro.htm

OR's can apply for BRO's in the 12 months after Bankruptcy. There is little point in them doing one early in that time as the restrictions start from the date of the Order for BRO/BRU itself and the period/tariff is based on the "seriousness" of the misconduct. Because the restrictions are on a bankrupt until discharge anyway there would be a double running if they got a BRO early, and thus this would negate some of the "protection" to others that the BRO is there for.

That's not to say that an OR won't get one early just that it's unlikely. It can be expected therefore that there may be a period of uncertainty as to whether the OR might be seeking a BRO or not. One good indicator that he is not is that he commences the Early Discharge process.

So what sort of conduct warrants a BRO/BRU. This is governed by the provisions of Schedule 4a of the Insolvency Act 1986, although the list is not exhaustive.
http://www.opsi.gov.uk/acts/acts2002/uk ... n_45#sch20

One other thing to think about

BRO/BRU's are not necessarily the worse things in the world, especially if they are not for a long period (say 2-4 years) - yes it's hardly pleasant having someone say somethings been done that shouldn't have been done, but it's not like it's a criminal record. They are not "penal" they're there in essence to "protect" people/creditors in the future and to act as a deterrent to others. That's not to belittle the impact that it may have on the individual and it's a very easy thing to say, but what they do is make the restricitions that an individual is under extend beyond 12 months. Before April 2004 they were for 3 years anyway - and a lot still think they are! The Credit Reference Agencies are still going to make it difficult for a bankrupt to be "normal" anyway as the bankruptcy will be on their CRF for 6 years.

The OR's website now provides details of recent BRO's and therefore it may be useful to take a look at the same to gain an understanding of the type of conduct that may warrant a BRO/BRU (and for how long)
http://www.insolvency.gov.uk/databases/ ... latest.asp

BRO's are still a relatively new piece of legislation and these will develop as case law arises in respect of the same. As more experience is gained better information and comment will become available.

Credit Reference Agencies will keep any BRO/U on file for the full length of time.
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By TalbotWoods
#220551 UPDATED 7 Feb 2010

I've now heard back from the ICO regarding a change in the way BRO/U's are reported on your CRFs, for some it is not such good news and for others there is no change

BRO's and BRU's will now stay on your CRFs for a MINIMUM of six years from the date they are awarded.

So, for example

You go bankrupt on 15/5/2007
BRO/U awarded for 5 years on 01/5/2008
Your bankruptcy will fall off 15/5/2013
Your BRO/U will fall off 31/4/2014

If the BRO is for MORE than 6 years it will remain on your CRF until it has expired, but will then fall off immediately

You go bankrupt on 15/5/2007
BRO/U awarded for 10 years on 01/5/2008
Your bankruptcy will fall off 15/5/2013
Your BRO/U will fall off 31/4/2018

And this time it looks like it wasn't the creditors who asked for this, it looks as if it was the Insolvency Service, as they felt that if a BRO/U is awarded then it is for reckless behaviour, etc, so should be highlighted for the normal reporting period of 6 years minimum.

Tim