Office holders Powers part 4

In recent weeks we have looked at the informal power of questioning which is given under section 235 of the Insolvency Act 1986. There are two other routes which can be followed to obtain information from certain people involved in company affairs. There is a public examination pursuant to section 133, (a similar power exists in respect of bankrupts under section 290) and there is a private examination under section 236. The requirements and scope of each differ.

Section 133 applies to compulsory liquidations (although the same effect can be achieved in voluntary liquidations through the use of section 112, rare though it would be in practice to use it). The application is made by the official receiver, (the provisions regarding Scotland are slightly different and since this series deals with the law applicable in England and Wales provisions applicable to Scotland will be ignored) and the application has to be made before the company is dissolved (which is the final act causing the company to cease to exist). The persons who can be examined at such an examination fall into three categories. The first is anyone who is or has been an officer of the company. (The scope of this has already been considered in previous articles in connection with section 235). The next category is someone who has been a liquidator or administrator of the company or receiver or manager. The final category is anyone who is or has been concerned or is taken part in the promotion formation or management of the company. The scope of persons who can therefore be covered by the public examination is very wide, and essentially encompasses all categories of people who can have had any serious role in managing it or its business or property.

Although the official receiver can decide to pursue a public examination, subject to the court directing otherwise the official receiver can also be required to make an application under section 133(2). The requirement can come either from creditors of the company amounting to one half in value or more, or from the shareholders of the company if threequarters in value or more support it. The procedure appears in the Insolvency Rules rule 4.213. Unless the shareholder or creditor making the requisition has 75% or more or 50% or more of the shareholding or debt personally, the request has to list the creditors/shareholders supporting the examination and specifying their debt/shareholding and giving written confirmation from each of them of their support. The request has to specify various things. It has to set out the name of the person who it is proposed should be examined, the relationship he or she had with the company and the reasons why an examination is requested. In addition before the application to the court those requisitioning the examination have to deposit with the official receiver such some as the official receiver may determine to be appropriate by way of security for the expenses of the hearing of a public examination if ordered. Under rule 4.217 the court can order that the expenses of requisitioned examination paid as to the proportion the court specifies out of that deposit instead of out of the assets of the company. That rule also makes it clear that in no case do the costs and expenses of the public examination fall on the official receiver personally.

If the requisition is duly made and security duly given then the official receiver is to make the application within 28 days of the request. However if the official receiver considers that the request is unreasonable in the circumstances he or she can apply to the court for an order that the examination need not take place (although if that application is made without notice to the requisitioners, notice is to be given forthwith to them).