Office holders Powers part 3

The information and assistance which is to be given pursuant to section 235 is specified in 235(2). This requires someone falling within those categories of persons caught by the section to give to the office holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office holder may at any time after the effective date (as defined in last week's article) reasonably require. It also includes a requirement for such persons to attend on the office holder at such times as the office holder may reasonably require.

Although as we shall see there are other formal procedures for office holders to obtain information, an office holder will and should normally utilise this section as the first attempt to get the relevant information.

As is obvious from the terms of the section, there is room for disagreement as to whether information is reasonably required, what it relates to, or what is reasonably required by way of attendance. If there is a dispute, the office holder can apply to court pursuant to rule 7.20 of the 1986 Insolvency Rules. If the court agrees the court may make such orders as it thinks necessary for the enforcement of the obligations under section 235. It can also provide that all the costs of and incidental to the application for enforcement shall be paid by the person against whom the order is made. Therefore if someone challenges the officeholder, they would normally want to have pretty solid grounds for doing so.

Although the information obtained is confidential office holders are allowed to disclose matters in the public interest. Thus information can be passed to the relevant prosecuting authority if that is thought appropriate. Information can be passed to the Inland Revenue in a case that merits it, and to the Secretary of State for Trade and Industry to allow a decision to be made as to whether proceedings for the disqualification of a director should be started.

This is an informal procedure but nonetheless an important one given that the information obtained might well be used for various important purposes. In addition to potential reports as aforesaid, this information will allow the office holder to consider the circumstances surrounding the demise of the company and the destination of its property. It will also permit suitable steps to be taken to pursue actions against those persons who appear to have infringed their duties or be potentially subject to statutory rights of action by for example the office holder. One important feature of the informal procedure is that questions may be asked of a number of different persons who were involved. The person being questioned does not have to be in any way "a suspect" in relation to wrongdoing. Frequently the information which they gave will be of immense use in considering the acts or defaults of other directors. The interview will usually be recorded and in consequence the transcribed comments can be carefully considered. There is often an additional session of informal questioning when directors etc may be questioned about discrepancies between their original answers and the answers of other directors or of the information appearing from the documents.

The office holder may consider that he or she has enough information one way or another as a result of these informal enquiries. There are however formal alternatives which can be pursued. We will start to look at those next week.