Following consideration of reports made under Section 218(4) (and otherwise), a criminal investigation may result. Frequently the criminal investigation is carried out by the Department of Trade and Industry, and one of the Department’s officials (an investigation officer) is likely to contact the practitioner as part of that investigation. Often the investigation officer will wish to review the company’s books, papers, etc. Should a criminal prosecution ensue, the company’s records, etc will be required so it is imperative that where a practitioner is aware of a criminal investigation he/she should not destroy those records until the position has been discussed with the investigation officer.

2.   Disclosure of Statements and Preliminary Investigation Questionnaires 

Until now the legal advice given to The Service in connection with the disclosure of statements, including preliminary investigation questionnaires (PIQs), supplied by directors and bankrupts has been to the effect that copies of such statements should not be passed to insolvency practitioners appointed as liquidator or trustee without the written permission of the person who gave the statement.

This matter has recently been discussed with Counsel, who now advises that the Official Receiver is able to, and, as part of his obligations to insolvency practitioners appointed as liquidators and trustees, normally should pass copies of such statements to them.  Counsel’s reasoning is based on the dual role of the Official Receiver as a gatherer of initial information both for the purposes of his statutory duties and for the protection and realisation of the estate.  The Insolvency Rules (4.107 and 6.125) require the Official Receiver, on handing over the estate to a person other than himself appointed as liquidator or trustee, to supply to that person such information as is reasonably required by the liquidator/trustee for the effective discharge of his duties in that capacity.

This means that in every case there has to be what Counsel has termed “a thinking consideration” of the matter by the Official Receiver, based on the facts of the case, as to whether or not the information in the statement or PIQ is “reasonably required” by the liquidator or trustee.  It needs to be borne in mind that the insolvency practitioner, as trustee or liquidator, could in any event, through other means at his disposal, obtain or require the relevant information from the bankrupt or director   Counsel therefore considers that it would be an extremely unusual case in which the conclusion would be that the information contained in statements and PIQs obtained in the early stages of a case was not reasonably required by the liquidator or trustee.  Such statements and PIQs will contain details of assets and liabilities and may contain information which would lead the insolvency practitioner to consider whether a claim lies against any third party.

From now on, copies of statements and PIQs will therefore normally be supplied to insolvency practitioners on handover.

Where statements are obtained after a handover has taken place, the same consideration will be applied to them and, if considered appropriate, copies will be supplied to the insolvency practitioner.  If a statement is obtained solely for the purposes of further investigation, it might not contain information of use to an insolvency practitioner in carrying out his duties.  However, if the further investigation relates to the whereabouts or non-disclosure of an asset, it would be likely to contain such information.  This will be a matter for the Official Receiver’s judgement according to the facts of the case.

As a concession, in existing cases where handover has already taken place, copies of statements and PIQs will similarly be passed to an insolvency practitioner acting as liquidator or trustee on request.  Practitioners are asked to keep such requests to a minimum and the matter may need to be reviewed if Official Receivers are inundated with requests in older cases.

The Service’s Protracted Realisations Unit in Birmingham deals entirely with older cases and in the context of statements and PIQs will normally only hand over material that is readily available among the papers it has to hand.

Any enquiries about this article may be addressed to Sam Roberts, OR Operations, telephone number 020 7291 6824.

3. Destruction of an insolvent’s accounting books and records.

 Available from The Insolvency Service's web-site is Form BPDC (formerly form BL54.01). The form is a checklist of matters to be considered before destruction of the books and records of a company subject to a winding-up order or a bankrupt. Insolvency Practitioners are asked to submit the completed form to the appropriate Official Receiver together with any request for authority to destroy the accounting records.

Any enquiries regarding the above should be directed towards Shona Manson, Technical Section, Area 4.1, 21 Bloomsbury Street, London, WC1B 3QW: 020 7291 6778: shona.manson@insolvency.gov.uk

4. Collection and preservation of company records 

Article Withdrawn July 2012

5. Dealing with “List X” businesses that hold UK Government protectively marked information 

A List X site is a commercial site (i.e. not government) on UK soil which is approved to hold UK government protectively marked information marked CONFIDENTIAL and above. The term is equivalent to Facility Security Clearance used in other countries. There are a number of businesses in the UK carrying out contracted work on behalf of government departments, including the Ministry of Defence, the Home Office, Department of Health and HM Revenue and Customs, on List X sites. Some of these sites contain high-grade encryption equipment and codes.

Should an individual, company or partnership trading on a List X site enter an insolvency procedure, it is essential, in the interests of national security, that all protectively marked assets, books, papers and records are protected and not moved without the relevant security clearance.

List X sites have their status granted and monitored by the Defence Equipment and Support Department of the Ministry of Defence (DES) following Cabinet Office guidance.  The recovery of protectively marked material from a List X site is usually undertaken by DES in conjunction with other relevant parties.  It is possible that a business trading from a List X site has other general trade contracts and not just government contract(s) that has resulted in the List X site status.  A business trading from a List X site may have one or more other List X trading addresses.  Alternatively a business that has a List X site may have other trading addresses which are not classified as List X as the List X status is site specific (i.e. the site where the contract is being carried out) and not business specific.

Insolvency practitioners should allow DES to secure and remove all items relating to the relevant government contract, and may need to work closely with DES to ensure that the interests of national security are protected, and that all items are secured to the satisfaction of DES or until collection can be arranged if it cannot be carried out immediately. Such action is a priority to any steps the insolvency practitioner would normally take in his/her capacity as insolvency office-holder to realise the equipment for the benefit of the insolvent estate. 

Should insolvency practitioners become aware of insolvent businesses that are trading, or have traded from, a List X site immediate contact should be made with DES on the following number:

Advice Centre -  0117 9134378.

Following initial contact with the DES, arrangements will usually be made for either DES or the local police special branch to attend the List X site.  Insolvency practitioners should allow DES to secure and remove all items relating to the contract, even where this may result in computer equipment or stock being lost to the insolvent estate.  In all cases, an inventory of all material and equipment recovered, together with written confirmation of overriding national security interests, will be provided by DES. 

Any enquiries regarding this article should be directed towards Toby Watkinson, IP Policy Section, Area 5.7, 21 Bloomsbury Street, London WC1B 3QW; telephone: 020 7637 6566;  email: toby.watkinson@insolvency.gov.uk 

General enquiries may be directed to IPPolicy.Section@insolvency.gov.uk  

Telephone: 020 7291 677