Judicial support for liquidators & their investigations
A recent case before HHJ David Cooke in the BUSINESS AND PROPERTY COURTS IN BIRMINGHAM was a great result for the liquidators and their legal team, and came as a direct consequence of their tenacious pursuit of a respondent alleged to be a de facto director.
Whilst the decision itself does not contain any new law, concerning as it did (inter alia) an unsuccessful application for relief from sanctions in relation to disclosure, it shows a full appreciation of the aid insolvency practitioners are entitled to expect from parties and indeed the Court. Take for example this passage in the judgment in particular:
“The issues in this case revolve around the truth or otherwise of the explanation the respondents have given for the effective disappearance of the business and assets of a company that was apparently thriving until shortly before its liquidation. The liquidators come to the case with no prior knowledge of the facts and so are dependent on what they can ascertain from third parties. The explanation they have been given for the disappearance of the business is surprising, and there is a significant amount of material they have discovered that suggests that explanation is open to doubt. There is an obvious incentive for anyone who may be liable to claims by the company to suppress disclosure of documents that may be adverse to him. The liquidators rely greatly on proper performance of those with obligations to them or the company in order to undertake their own functions. In the context of litigation, it is if anything more important than usual to be satisfied that disclosure obligations are properly performed, because the liquidators may have less opportunity than other litigants to perform their own cross checks to pick up non-compliance.”
The challenge for insolvency practitioners and their legal representatives when it comes to situations such as this is often funding, including concerns about adverse costs. Do contact me to discuss how we can help with funding.
The case was Mustafa Hassanali Abdulali (1) Neil James Dingley (2) (as joint liquidators of MKG Convenience Ltd) MKG Convenience Ltd (3) v URL Local Express Ltd (1) KKS Investments Ltd (2) Kathiraavelu Komaleswaran (3), full judgment available on Bailii Neutral Citation Number: [2020] EWHC 547 (Ch).