Gould & Anor (PKF (UK) Llp (Administrators)) v Itmo Advent Computer Training Ltd & Anor

The court may, in exceptional circumstances, direct an administrator not to comply with otherwise mandatory disclosure requirements under Insolvency Act 1986 Schedule B1 and the Insolvency Rules 1986. The power arises where the direction is requisite for the convenient, economical and sensible management of the company’s affairs and gives the administrator a reasonable excuse for non-compliance. The power must be exercised cautiously. A direction may permanently dispense with disclosure where confidentiality is necessary and further disclosure would serve no useful purpose or cause wasteful expenditure.

The administrators of two companies applied for directions concerning disclosure of student creditors’ names, addresses and debts. The information was commercially sensitive because the value of the businesses depended on retaining the existing students. The court had previously deferred disclosure and extended the relevant period.

The administrators later secured purchasers, and no distribution to unsecured creditors was contemplated. They therefore sought an order dispensing with the disclosure requirement entirely. The central issue was whether the court possessed power to disapply the relevant requirements through its general power to give directions.

1. The court had no power under rule 2.33 of the Insolvency Rules 1986, whether read alone or with rule 2.30, to dispense entirely with the requirements in rule 2.33(2)(h) or (j). Rule 2.33(2)(h) concerns a statement of affairs that is not fully compliant. A statement that is full retains that character even where limited disclosure has been ordered under rule 2.30.
2. Paragraph 63 of Schedule B1 to the Insolvency Act 1986 gives the court power to give an administrator directions requisite in connection with his functions. That power may, in appropriate and uncommon circumstances, authorise departure from mandatory requirements.
3. Paragraph 49(7), read with the general power to give directions, recognises that an administrator may have a reasonable excuse for non-compliance. A court direction may both constitute and require the relevant non-compliance.
4. The power had to be exercised cautiously. Here, protecting commercially sensitive student information and avoiding unnecessary expenditure justified dispensing with the requirement to provide the details. The administrators were directed accordingly.