RELEASE OF AND THIRD PARTY ACCESS TO ACCOUNTING RECORDS

PART 4

September 2014

RELEASE OF AND THIRD PARTY ACCESS TO ACCOUNTING RECORDS 

47.45 Disclosure of accounting records - general

This Part provides guidance to assist the official receiver where he/she is asked to release information or documents from the insolvent’s accounting records (see paragraph 10.1) or to otherwise make the records available for inspection.

 

47.46 Presumption that records will not be made available

There is a presumption that the insolvent’s records will not be made available for inspection unless in the following circumstances:

  • Where required to do so during the process of formal disclosure in civil proceedings  (see Part 5)
  • Where required to do so by the court (see Part 6)
  • To assist a bankrupt/director in relation to the insolvency (see paragraphs 47.47 to 47.48)

 

47.47 Allowing company officers access to company records

Assuming that the official receiver is satisfied that a company officer requires access to the company’s records in connection with matters relating to the insolvency (including to assist in completing a tax return) then it should be allowed.

If the inspection is required for any other purpose (for example, unconnected legal proceedings) then the guidance of Technical Section should be sought before granting permission.

Where inspection is allowed, it should be limited to access to the records relating to the period that the officer in question was in post.

Access may also be allowed, in the terms described above, to a person acting on the specific, written, authority of the company officer.

 

47.48 Allowing bankrupts to access records

Assuming that the official receiver is satisfied that a bankrupt requires access to his/her own records in connection with matters relating to the insolvency (including to assist in completing a tax return) then it should be allowed.

If the inspection is required for any other purpose (for example, unconnected legal proceedings) then the guidance of Technical Section should be sought before granting permission.

Access may also be allowed, in the terms described above, to a person acting on the specific, written, authority of the bankrupt.

 

47.49 Allowing creditors and contributories access to the insolvent’s records

On a strict interpretation of the law (see paragraph 47.51) the official receiver may require a creditor (or contributory) to obtain a court order before they are allowed access to the company’s records.  The official receiver as liquidator may, however, exercise a discretion to permit inspection to non-privileged (see paragraph 47.9) non-confidential (see Part 1) company records to a creditor or contributory where that party is willing to reimburse the official receiver for any expense or where some benefit will accrue by granting permission [note 1].

In bankruptcy cases, there is no provision to allow the creditor to seek an order of the court so, in deciding whether to grant permission, the official receiver should consider the extent of the willingness of the creditor to reimburse his/her expenses (such as the costs of retrieving papers from storage), any benefit to the bankruptcy estate which may accrue and whether the bankrupt has given his/her permission (which is indicative but not compulsory).

See paragraphs 47.69 and 47.85 for guidance where an order is received that records are made available for inspection in relation to unconnected legal proceedings.

 

47.50 Access to accounting records by creditors or contributories in relation to unconnected legal proceedings

The official receiver may exercise his/her discretion (see paragraph 47.49) in allowing creditors/contributories access to accounting records in legal proceedings not directly connected to the insolvency proceedings.  Where access to the records is allowed, it should be on the following terms:

a) all parties to the proceedings should be allowed equal access;

b) no costs will be incurred by the estate or by the official receiver personally;

c) no original documents will be removed; and

d) no work has to be done by the official receiver.

 

47.51 Court order for creditor or contributory to access records – company only

As outlined in paragraph 47.49, creditors or contributories may, on a strict interpretation of the law, only access records with the permission of the court [note 2].  The court will grant permission in cases where the request is connected to the liquidation [note 3] or in other appropriate cases (where, for example, the creditor needs to obtain information to defend a claim under a guarantee (see paragraph 40.30).

The order of the court will not assist the creditor or contributory where the records are not held by the company [note 4].

See paragraph 47.85 for guidance where an order is received that records are produced in legal proceedings.

 

47.52 Statutory rights of Government departments to inspect records

Where the official receiver is satisfied that a Government department has a statutory right to inspect the records of the insolvent, inspection should normally be allowed.  The department can be asked to set out its power to inspect the records, where there is doubt.

If, in these circumstances, the official receiver no longer requires to retain possession of the records, he/she may pass them to the other department to facilitate their enquiries on receipt of an undertaking that:

a) the records will be returned to the official receiver on demand; and

b) the records will not be used in any proceedings without the official receiver being first informed.

Additionally, the official receiver should obtain a signed copy of the list of records handed over to the other department.

Where the request originates from HMRC, the additional guidance in the Partnership Agreement should be followed.

 

47.53 Release of records to the liquidator or trustee

Guidance on the handover of the insolvent’s books and papers to a liquidator or trustee is provided in paragraph 17.76, but where the liquidator or trustee requires the records in connection with legal proceedings they should be released immediately.

 

47.54 Power to refuse access to records on grounds of confidentiality or personal safety

Where the official receiver considers that a document forming part of the records is confidential in nature (see Part 1) or is of such a nature that its disclosure would be prejudicial to the proceedings or might reasonably be expected to lead to violence against any person, he/she may decline to allow it to be inspected by a person who would otherwise be entitled to inspect it [note 5].

Where there is such a refusal, the person wishing to inspect it may apply to court for that refusal to be overruled [note 6].

 

47.55 Right to copy documents

Where a person has the right under the Act or Rules to inspect the books and papers of the insolvent, he/she also has the right to be provided with copies [note 7] on payment of the appropriate fee, which amount is specified in the relevant Rule [note 8].

 

47.56 Member of official receiver’s staff to be present when records are inspected

It should generally be the case that a member of the official receiver’s staff should remain present when the records of the insolvent are being inspected by a director, bankrupt, creditor or contributory.

Where the records are being inspected by another Government department, or by the appointed insolvency practitioner, it need not be necessary for a member of staff to be present.

          

[Back to Part 3 – Release of confidential information to third parties] [On to Part 5 – Formal disclosure in civil proceedings]