If I read the Insolvency Technical Manual then the simple answer is: Where a bankrupt has employees the official receiver must terminate employment with effect from the date of the order, whether or not the business continues to trade.

A standard notice should be sent to every employee who may have a claim for wages, holiday pay, payment in lieu of notice etc. or in respect of redundancy, The official receiver will then issue employees with a standard letter and the booklet “Redundancy and Insolvency, A Guide for Employees”, which contains a claim form.

I am uncertain from your question whether you are referring to a person who has previously declared bankruptcy and has since been discharged or whether a bankruptcy process is pending

This question was answered by Debt Advice Foundation, an independent UK debt advice charity. If you have a debt problem, we can help you find the best solution for your situation. Debt Advice Foundation provides a free, confidential helpline and can advise you of all your options. Click here to find out more.

A discharged bankrupt can employ people, but they may find it difficult getting credit in order to run a business as they cannot be a director of a limited company for 12 months. They may have further restrictions put on them that means their bankruptcy is extended past the standard 12 months, in this case there are further restrictions on how they trade and they cannot be a director of a limited company for the length of the extra restrictions.

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