11.19 Selecting the appropriate interviewee
In a compulsory liquidation the official receiver must select the most appropriate person to interview in the first instance. There may be one or more company directors, as well as a company secretary. In addition, there may be other persons who were involved in the running of the company who have not been formally appointed as a company officer.
During the course of the initial enquiries, the official receiver should establish which company officer is able to provide the most information about the company, and the Notice to company officer letter note 1 should be sent making an appointment for the company officer to attend upon the official receiver for interview. A notice to company officer note 1 should be sent to all other company officers informing them of the winding up order, but not making an appointment for interview until the official receiver establishes whether their attendance will be necessary.
If the interviewee is unable to attend upon the official receiver for an extended period of time due to reasons of ill health or another valid reason, the official receiver may consider interviewing another company officer in the meantime. Where the interviewee who is unable to attend is the only company officer who is able to provide full information about the company, the official receiver may consider asking him/her to return the completed Preliminary Information Questionnaire (PIQC) note 2 and then carrying out the interview at his/her home or by telephone.Where the interviewer is to attend at the company officer's home for interview, the safety guidance for staff contained in Chapter 8 Part 2 - Inspections should be followed.
A PIQC must be sent to the interviewee with the notice to company officer note 1 for completion prior to the interview. The interviewee should bring the completed PIQC when he/she attends for interview. If the PIQC is not completed or is only partially completed, the interviewee should be invited to complete it before the interview begins.At the beginning of the interview the interviewee should be asked if he/she completed the PIQC by himself/herself, or if any assistance was received from anyone else. This information should be recorded by the official receiver on the additional questions form note 3. Where the questionnaire has been completed by a third party, the details of who completed it and an explanation of the circumstances and reasons for this must be recorded.
If the interviewee is unable to complete the PIQC (e.g. due to illiteracy, blindness or other disability) the questions in the PIQC should be read out to the interviewee exactly as they are written, and the interviewee's answers recorded fully and accurately in the interviewee's own words.The questions in the PIQC should be read out exactly as printed so that the interviewee cannot claim at a later date that he/she thought he/she was answering a different question, which could throw doubt on the accuracy of the information given.
If the interviewee is unable to read, the official receiver should ensure that the interviewee is given the opportunity to ask questions and that the liquidation processes are fully explained as he/she should not be presumed to understand the written guides.
No amendments should be made to the PIQC after it has been signed and dated by the interviewee. The official receiver must not alter, delete or add to any answer in the PIQC. At the beginning of the interview, the official receiver should check that all alterations in the PIQC have been initialed and dated by the interviewee, and that the interviewee has signed and dated the PIQC in the appropriate places. The official receiver should also draw the interviewee's attention to the Perjury Act 1911 section 5 at the beginning of the PIQC, and check that the interviewee has completed and signed the declaration that this has been drawn to his/her attention.
The official receiver should then go through the completed PIQC with the interviewee. Where the interviewee has not answered a question, or the information given is incomplete or needs to be expanded upon, the official receiver should question the interviewee accordingly and record the information given on the additional questions form. The official receiver should not ask every question in the PIQC again just to verify information already given, but should only seek further information where the answer given in the PIQC is incomplete, inadequate or contradicts information given elsewhere in the PIQC or already known by the official receiver. If an interviewee insists on giving an apparently inaccurate or inappropriate response to a question in the PIQC, even after the official receiver has drawn his/her attention to the discrepancy in the information provided, what is said by the interviewee must be recorded. The fact that the discrepancy has been drawn to the interviewee's attention must be recorded, with an entry along the lines of:
"It has been pointed out to me that....However I maintain....".
Matters of apparent inaccuracy or inadequacy of information provided in the PIQC and additional questions form may be covered in more detail in a narrative statement taken. See also paragraph 11.42.
When all additional information required to complete the PIQC has been obtained and recorded, the interviewee should be asked to read through the additional questions form and initial and date all alterations made, sign and date at the bottom of each page, and at the end of the statement. The interviewer should sign the bottom of each page and at the end of the statement as a witness.
If the interviewee does not understand the meaning of a question in the PIQC, the official receiver should try to rephrase the question in such a way that the interviewee can understand and answer the question. Where the interviewee still cannot understand or answer the question, this should be recorded in the additional questions form.
It is important for the official receiver to establish the respective roles and responsibilities of all those involved in the running of the company, and whether such roles and responsibilities were allocated and recorded in the accounting records (e.g. service agreement, board meeting minutes) or by custom.Where there are matters of possible misconduct for further investigation, such as trading with knowledge of insolvency or to the detriment of crown creditors, it is essential to determine which company officer was responsible for the relevant actions taken or not taken. The official receiver should seek to avoid the possibility of a company officer claiming at a later date to have been unaware of or not responsible for actions which he/she is claimed to have carried out that form the basis of an allegation of misconduct.
Where a person who is not a formally appointed company officer appears from the information given by the interviewee to have been acting as a director of the company (a de-facto director) or to have been wholly controlling the company by giving instructions to the directors on which they acted (a shadow director) the official receiver must determine the extent of that person's involvement, roles and responsibilities in the company, the reasons why he/she was so involved and why he/she was not formally appointed as a company director. A person so involved in the running of the company but not formally appointed as a director may have been disqualified from acting as a director as a result of a bankruptcy order or a bankruptcy restrictions order made against him/her or a disqualification order or undertaking under the Company Directors Disqualification Act 1986 (CDDA86) section 6 or section 7, and will be in violation of such an order if found to be acting the management of the company without leave of the court to do so. Where it is established that this has occurred a report should be submitted to the Authorisations Team outlining the facts and providing supporting evidence. See also Part 6.
It is also important to establish the amount, dates and circumstances of monies put into the company and taken out of the company by the company officers. Where the accounting records are available during the interview, the official receiver may ask the interviewee to show where such transactions are evidenced in the records.
In most cases it will be appropriate to take a narrative statement in order to obtain a concise chronological account of the formation and trading history of the company, and to explain the reasons for the insolvency.
The interviewee's attention should be drawn to the Perjury Act 1911 section 5 before the narrative statement is taken.
The official receiver may take a narrative statement from most or all of the company officers in order to verify information given and establish the roles and responsibility of each company officer. Such statements may just cover certain matters, or may be full statements as appropriate. Even where the content of the statements are the same or similar, it is important to have separate statements taken independently from each interviewee, and it is not appropriate for the official receiver to show an interviewee another company officer's statement.
The Narrative sheet form note 4 should be used at the start of the narrative statement, and the interviewee should be asked to read through and sign and date each page of the statement taken, and any alteration made.Once signed and dated, no alterations should be made to the statement.
A narrative statement may be used to amplify one or more points from the PIQC, or particularly where the case is complex and/or there are matters of possible further investigation, it may be used to give a concise chronological history of the company and the dates and facts that explain the reason for the insolvency. The narrative statement may cover, amongst other matters;
details of the formation of the company, dealing with any predecessor business or businesses,
the respective roles and responsibilities of all the company officers, and how that responsibility was identified (see also paragraph 11.24),
how the business operated and how trading was financed,including loans from and to company officers,
details of any transactions with associated companies, and an explanation of why such transactions occurred and where they can be evidenced in the accounting records,
details of any accounts prepared and what accounting records were kept, and by whom they were maintained,
when and why losses were sustained, and what steps were taken, and by whom, in order to mitigate losses sustained, how continued trading was financed and monitored,
why the business failed (if it failed) and when and why the business ceased to trade,
any matters of apparent misconduct,
any other reasons for the insolvency.
Where a narrative is lengthy and/or deals with complex matters, it may be worthwhile to use sub-headings to divide it, e.g. disposal of asset detail, places of business, trading history, why business ceased to trade, etc.
See also paragraph 11.17 on the disclosure of statements to a liquidator.
Where a statement is taken from a third party, the heading of the statement should read "Statement made in pursuance of section 132 of the Insolvency Act 1986" etc. A Perjury Act warning is not appropriate.
If the statement is taken down in manuscript form, the interviewee should initial and date all alterations and each page should be signed and dated on the day on which the statement is taken. A manuscript statement may be particularly useful where there is a prospect (e.g. previous history of non co-operation) that the interviewee will not sign and return any statement subsequently sent to him/her.
11.29 Statement taken directly onto a PC
Where a statement is taken directly onto a PC, the print out should be signed and dated, with any alterations also being initialed and dated. Where any versions of the typed narrative are printed off and amended by the interviewee, they should be retained on the official receiver’s file.
If the narrative is drafted after the interview using notes made during the interview, the interviewee should be asked to initial and date each alteration and sign each page of the notes. The notes must be preserved so that if the interviewee later fails to sign the typed statement or disputes its contents there will be evidence as to what was said during the original interview. The interviewee should be told that he/she will be asked to sign, date and return a typed statement that will be sent to him/her by post within 7 working days. The typed statement must not include any information which is not contained in the notes and, while there may be a desire to tidy up the grammar, syntax, etc, it is crucial that the essence is not changed and no attempt is made to give more or less emphasis or prominence to facts than is reflected in the notes or to insert something by way of clarification - for example by adding "per annum" after "I drew £25,000 from the company" if "per annum" is not written in the notes. A copy of the notes must be available to the interviewee when he/she is asked to sign the typed statement. Any matters which might/should have been dealt with in the interview but not reflected in the notes can only be dealt with by way of a further statement.
At the conclusion of the interview, the interviewee should read through the statement, initial and date any amendments made during the course of the interview or asked for during the read through and then sign and date the bottom of each page and at the end of the statement. The final signature should be witnessed by the interviewer. Once signed and dated and the interview completed, no answer given and recorded should be added to, deleted or altered. Such amendments should be regarded as additional information (even if they constitute a deletion) and recorded in the form of an additional narrative statement (taken at that time or at a later date).
If the interviewee is unable to read the statement, the statement must be read to the interviewee by a third party. On the last page of the statement the person who read it out must endorse it as follows:
"On (date) I (name) (occupation) of (address) read out this statement to (name of interviewee) who signed it in my presence." The endorsement must be signed and dated by the person who made the endorsement. Where the interviewee is unable to sign the statement, the person who reads out the statement to the interviewee should refer to this in their endorsement, indicating why it was not possible for the interviewee to sign the statement.
Where the official receiver has not taken possession of the accounting records by the time the interview is conducted, and if the interviewee does not bring the accounting records with him/her to the interview, the official receiver must ascertain the current whereabouts of the records from the interviewee, and record the details in the additional questions form or narrative statement. The official receiver must make it clear to the interviewee that the records must be delivered up to the official receiver, and must be preserved until the official receiver is able to take possession of them. Where the accounting records are held by someone other than the interviewee, the official receiver must contact the person holding the records in order to arrange the collection or delivery of them as a matter of priority.
Where accounting records are delivered up at an interview, a receipt must always be issued note 5. The schedule of records handed over in the proceedings note 6 at the back of the PIQC should be completed in every case where there is a possibility of further investigation. The Accounting records schedule note 8 may be completed during the interview if there is sufficient time to do so, and it is desirable to do so if there are matters of apparent misconduct for further investigation.
Details of the allocation of responsibility for the drawing up and maintenance of the accounting records of the company should be established in every case and recorded in the additional questions form, narrative statement or accounting records schedule.
For more information on the procedure for dealing with accounting records, see Chapter 10 Part 2 - Custody, storage, preservation and destruction of records.
If the interviewee declines to sign any questionnaire, schedule or statement until he/she has taken further advice, or if the interviewee is unsure, seems worried or confused, then the official receiver should agree (and record) the need for the return of the signed document(s) within a specified timescale. A copy should be kept of any documents taken away. If the interviewee refuses to answer questions put to him/her by the official receiver at all, his/her duty to co-operate with the official receiver under section 235 and the potential consequences of non co-operation should be drawn to the interviewee's attention. Where the interviewee still refuses to answer, a file note should be made by the official receiver which details the questions asked and if a reason has been given, why the interviewee refuses to answer. Where the interviewee refuses to sign the additional questions form or any narrative statement taken, a similar file note should be made by the official receiver to record the refusal and the reason why the interviewee will not sign if a reason has been given.
Where an interviewee is abusive, the official receiver should make a file note of the interviewee's conduct, including as far as possible a full record of what was actually said. If an interviewee continues with threatening or abusive behaviour, the official receiver may terminate the interview, and should make a file note of the reason why the interview was terminated.
Notes of abusive conduct or blatant refusal to co-operate will be of use if some form of action is subsequently taken against the interviewee.