TAG Capital Venture, Re

Information obtained by a provisional liquidator under section 235 of the Insolvency Act 1986 may be used in contested winding-up proceedings where it is relevant to issues arising on the petition. The statutory confidentiality of compulsory information restricts its use to the purposes for which it was obtained; it does not prevent the court receiving relevant evidence assisting either side.

Where the petition debt is genuinely disputed, the petitioning creditors and provisional liquidators have materially different interests. The provisional liquidators must investigate the claim dispassionately, including matters which may undermine it. In those circumstances they should have separate solicitors. The petitioners’ solicitors need not themselves be removed where the future conflict is adequately addressed by separate representation for the provisional liquidators.

Creditors presented a winding-up petition against TAG Capital Venture Limited. The debt was disputed, and provisional liquidators had been appointed. The company’s sole director applied to exclude evidence from an interview conducted by a provisional liquidator under section 235 of the Insolvency Act 1986, and sought an order requiring the solicitors acting for both the petitioners and the provisional liquidators to cease acting for the petitioners.

The application raised two questions: whether the interview transcript and related evidence were admissible on the petition, and whether the shared representation created a conflict requiring separate solicitors for the provisional liquidators.

1. The application to exclude the evidence was refused. Information obtained compulsorily under section 235 of the Insolvency Act 1986 is confidential in the sense that it may be used only for the purposes for which the power was conferred. The investigation of facts relevant to a winding-up petition falls within those purposes.

2. A provisional liquidator is an officer of the court. If investigations disclose evidence relevant to whether the petition debt exists, whether a contract was made, or the nature and activities of the company, the provisional liquidator may place that evidence before the court, whether it assists or opposes the petitioners. The transcript should not be excluded merely because it may contain irrelevant material; the judge hearing the petition can disregard inadmissible comment and determine what evidence is admissible.

3. Where the petition debt is genuinely disputed and a hearing is required to determine whether the petition is well founded, the interests of the petitioners and provisional liquidators conflict. The petitioners seek to establish their claim, whereas the provisional liquidators must investigate objectively whether it is well founded and pursue reasonable enquiries which may undermine it.

4. While the dispute continued, the provisional liquidators were directed to retain separate solicitors. The court declined to require Gallant Macmillan to cease acting for the petitioners. The conflict was sufficiently addressed by new solicitors acting for the provisional liquidators. The director could not complain about interview information already disclosed with knowledge that the same solicitor was present, but it was not too late to seek separate representation for the future.

The judgment was given at first instance in contested winding-up proceedings. Provisional liquidators had already been appointed. No appeal or earlier decision is stated in the judgment.