Hunt (As Liquidator) v Katz & Ors

Orders under section 236 of the Insolvency Act require a reasonable requirement for the material sought, must not be used abusively, and must not impose an unreasonable burden on the respondent. In exceptional circumstances, compliance may be conditional on the office-holder personally bearing the respondent’s costs. A liquidator appointed after restoration cannot insist on immediate production of records merely because access would assist notification of creditors, particularly where alternative means of notification exist and the need for the material has not yet been established. The court may defer substantive relief until evidence has been filed and the application can be fairly determined.

Stephen Hunt, appointed liquidator of companies restored to the register, sought delivery of company records and former liquidators’ files from Stephen Katz, Brian Johnson and David Birne. At the hearing, he limited the immediate relief sought to up-to-date creditor lists, to enable notification of creditors.

The respondents sought time to file evidence and opposed summary relief. They also sought transfer of the application from Manchester to London and relied on the connection between the application and the earlier restoration proceedings. The issues were whether immediate production of creditor information was justified under sections 234 and 236 of the Insolvency Act, whether compliance costs should be borne by the applicant, and where the application should be heard.

1. Immediate disclosure refused. The application for immediate production of creditor lists was not determined summarily. The court accepted that the respondents would have to search their winding-up files because no separate up-to-date lists existed.
2. Section 236 required consideration of three matters: whether there was a reasonable requirement for the material sought; whether the jurisdiction was being used abusively; and whether the order would impose an unreasonable burden on the respondent. No reasonable requirement for immediate production had been demonstrated before a full hearing on the evidence. The companies had already been wound up and dissolved, and there was no suggestion that the former liquidators had mishandled creditors’ claims.
3. The applicant had been appointed under section 108, rather than section 100, of the Insolvency Act. The applicable obligation under rule 6.22(6) of the Insolvency Rules 2016 permitted notification of creditors or advertisement in accordance with court directions. The applicant had not sought alternative directions for advertisement and the 28-day period had expired. He could advertise, write to creditors identified in the statements of affairs, or await the effective hearing.
4. In the very exceptional circumstances of completed liquidations followed by dissolution and restoration, any order requiring the former liquidators to produce material would, if made, have been conditional on the applicant personally bearing the costs of compliance.
5. The application remained in Manchester. Although London would probably have been more convenient if considered in isolation, the application was closely linked to the Manchester restoration proceedings. Any challenge to the restoration order or the applicant’s appointment would have to be brought there unless transferred.
6. The respondents were awarded two thirds of the costs of the hearing, payable personally by the applicant. The application otherwise continued under directions for evidence, including disclosure of relevant communications with the Government Legal Service.

The judgment describes an earlier order by His Honour Judge Raynor QC on 7 March 2017 restoring the companies to the register and appointing Mr Hunt as liquidator under section 108 of the Insolvency Act. The present judgment concerned a subsequent application for delivery of records and related directions.