Having a Bankrupt on the Committee

Previously, under the Insolvency Act of 1986, a bankrupt was automatically discharged after three years or two years if it was in summary administration unless the Official Receiver applied to suspend the automatic discharge.

Whenever a club official, through his own business, was declared bankrupt, we advised club committees to be very careful about having them as a committee member or officer of the club. The situation has changed somewhat in that a major bankruptcy reform came into force on April 1. Most bankruptcies now have been reduced to a year or even less.

The Federation is aware that a number of club members become bankrupt through no fault of their own, i.e. when running a company and they fail to receive payment from other companies they have supplied goods or services to, thus resulting in a cashflow problem too serious for them to continue trading. In these circumstances we have previously advised clubs that we can see no reason why an individual should not remain on the committee and the latest regulations will reduce further the number of individuals whom committees should consider not having on committees.

A discharged bankrupt is, of course, someone who has got over the problem and it is only undischarged bankrupts that the committee ought to be aware of because the Financial Services Authority, the local authority or the police could well object to a registration certificate in such circumstances as a bankrupt being on the committee.