Trustee In Bankruptcy Investigations Got Any Tougher?
Did Trustee In Bankruptcy investigations just get tougher in respect of Section 366 of the Insolvency Act 1986 information and investigation applications due to Thomas & Ors v Metro Bank Plc & Ors (Re Ilya Yurov) [2022] EWHC 2112 (Ch) (“Thomas”)?
Probably not. But what it appears to show is how a legal issue could potentially infect a conceivably straightforward application and even possibly derail the Trustee for a period of time.
Section 366 applications can take a long time. Thomas is a significant case and after issuing the Section 366 application on 9 February 2022 the final hearing still appears many months from being determined.
In general terms, delays arising from the pedestrian pace at which a Trustee in Bankruptcy can hope to hoover up information through contested Court proceedings are particularly notable. By the time the information which is sought is available, it is possible a bankrupt’s assets could be moved on through a series of structures rendering further court applications otiose. When the next court order is granted, the assets could have been moved on even further away from the fingertips of the Trustee. Such matters could resemble a bar of soap that continually slips away.
It is possible some people may feel there appears a potential imbalance in the system through which Section 366 information and investigation applications are capable of being deployed by the Trustee in Bankruptcy. They are designed to assist the Trustee reconstitute knowledge and reconstruct records to benefit the bankruptcy estate.
Concerns about oppression may sometimes appear disproportionate given the Trustee in Bankruptcy should know all that the bankrupt knows. Yet even with a Trustee in Bankruptcy working under Stakanovite conditions, it can still be a tall order to get to that position. Does the current system balance matters sufficiently to protect the interests of creditors? Well, no system can ever be perfect but perhaps it could be better.
In Thomas legal privilege has descended upon the application to complicate the case considerably. It might be a long time before the Trustees obtains the non-bankrupt spouse’s bank information.
Thomas was no litigation backwater. Its background encompassed a worldwide freezing order for $900 million.
Perhaps there is a case for Trustees in Bankrupt to have rights to information to inspect documents early on without needing to initially trouble the court, even if there might be restrictions and safeguards necessary to protect third parties from subsequent deployment. Why not let the Trustee view information expeditiously so that an investigation does not grind to a halt?
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