Should Trustee In Bankruptcy Have A Statutory Presumption To Information?
Interesting to note lots of moans (rightly so conceivably) about failure to safeguard public funds where the Bounce Back Loans are concerned with the likes of Sir David Green QC saying:
You wouldn’t send an army into battle without assessing the risks.
However, staying on a similar page – maybe spare a thought for creditors of bankruptcy estates and how the statutory regime is set up to safeguard their interests in the assets of such estates.
Perhaps consider if there are sufficient safeguards that when a Trustee in Bankruptcy cannot get in to realise an estate because of a failure to cooperate or to provide information, that *after*, sometimes due to court processes, long after the event, the Trustee can then seek to address the position. The legislation prescribes a Court process that requires the Trustee in Bankruptcy to prove a *reasonable requirement* for information, instead of providing a statutory presumption of granting him or her as an Officer of the Court the right to such information needed. This is notwithstanding the Trustee has entered office as a stranger.
There are many instances in which a Trustee has to approach third parties for information which can be a time consuming and expensive. The Trustee may have to prove the position by grappling with such nebulous concepts as cooperation. As a result, a Trustee typically has to give someone *every* chance to cooperate (not a chance) so that he or she as Trustee can make their case to the court for the evidence to prove a failure to cooperate. That might be at the cost, delay and expense ultimately of creditors. It could mean the cost, expense and delay might make it not worth the candle. Does that mean creditors lose out by weighting the system in such a manner?
Even a rare without notice application under Section 365 of the Insolvency Act 1986 that developed in Hyde & Anor v Djurberg [2022] EWHC 1534 (Ch) sprouted after a whole stream of issues arose in which it appears the bankruptcy estate could have been prejudiced:
In this case, it has been shown that there has been dissipation of assets and destruction of records. The Court is asked to put the Trustees in the position which ought to have existed through co-operation. It is because of the lack of co-operation, that this application had had to be made and to be made without notice. The evidence establishes there is a real need to avoid the further opportunity for Mr Djurbery to dissipate or destroy or conceal assets and/or documents. The evidence in this case supports the conclusion that the order should be made on an application without notice because of the risk of further dissipation and further destruction.
Is it now time for a statutory presumption to be introduced into the legislation for Trustees to obtain information to assist potentially in further safeguarding the assets of bankruptcy estates for creditors?
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