What is a Bankruptcy Restrictions Undertaking?
The purpose of a bankruptcy restrictions undertaking is to prolong the restrictions of bankruptcy if you have been reckless or dishonest. The restrictions are prolonged for a period between 2 and 15 years and you may be subject to prosecution if you break these restrictions.
A bankruptcy restrictions undertaking has the same effect as a bankruptcy restrictions order but without the need to go to court. If you do not accept the bankruptcy restrictions undertaking then the official receiver may apply to the court for an order. On the flip side if you do accept, the term that you are subjected to restrictions may be discounted.
What leads to a bankruptcy restrictions undertaking?
To determine if an order is appropriate the official receiver must consider if the public need protecting from the bankrupt. Such behaviour may include:
- Failing to keep or produce records which would explain a loss of money or property.
- Giving away assets or selling them at less than their value.
- Deliberately paying off some creditors in preference to others.
- Failing to supply goods or services which have been paid for (taking deposits).
- Carrying on a business when he knew or ought to have known he could not pay his debts (trading with knowledge of insolvency).
- Incurring debts which he knew he had no reasonable chance of repaying.
- Gambling or making rash speculations or being unreasonably extravagant.
- Causing his debts to increase by neglecting his business affairs.
- Behaving fraudulently, e.g. making a false claim to obtain credit.
- Not co-operating with the Official Receiver or Trustee.
- Being bankrupt for a second time in six years is also a matter of conduct to be considered but is not, in itself, sufficient reason to apply for a BRO.
