What is a Bankruptcy Restriction Order (“BRO”) ?

If the official receiver considers that a bankrupt has acted dishonestly, or is blameworthy in some other way i.e. excessive gambling, they will report the facts to court and ask it to make a BRO. The court will consider this report and any other evidence put before it, and will decide whether it should make a BRO. If it does, you will be subject to certain restrictions for the period stated in the order. This can be from 2 to 15 years.
What are the restrictions?

The restrictions are wide ranging. They include the restrictions set out in insolvency law which you are subject to when you are made bankrupt and which are normally lifted when you are discharged from bankruptcy. These restrictions include the following:

  • If you carry on business in a different name from the name in which you were made bankrupt, you must disclose to those you wish to do business with the name (or trading style) under which you were made bankrupt.
  • Bankruptcy usually involves the closure of any business that you have and the dismissal of your employees.
  • Provider if you wish to get credit of £500 or more.
  • You must disclose your status as a person subject to bankruptcy restrictions to a credit.
  • You may not act as the director of a company or take part in its promotion, formation or management unless you apply to the court for permission to do so.
  • It can affect your employment.  Members of certain professions including solicitors and people whose roles are regulated by the Financial Services Authority are not allowed to become bankrupt.
  • You may not be a Member of Parliament in England or Wales.

It would be a criminal offence not to comply with any of the first four restrictions above.  There are many other restrictions, which are not set out in insolvency law. For example, you would not be able to act as a local councillor.
Here is a list of some of the actions that could cause a Bankruptcy Restriction Order to be issued.

  • You purposefully incurred debts that you know you could not repay.
  • You sell assets for less than their market value or give them away for free.
  • You showed priority to certain creditors such as family and friends than to others.
  • Your spending was unreasonably extravagant.
  • You partook in gambling or making bad speculations.
  • You increased your debts by neglecting your business affairs and responsibilities.
  • You engaged in fraudulent activities or breach of trust.
  • You carried on with your business when you should have filed for insolvency.