Liquidator’s Claim Defeated By Disclosure Difficulty

Disclosure is an important part of litigation. At its core, it serves to function as a means of furthering attempts at a fair trial. The consequences of inadequate disclosure can be serious, as arose in the case of Factor v Haddad & Ors [2026] EWHC 410 (Ch) (“Factor”).

In general terms, each side will typically be required to advance relevant disclosure which is both potentially helpful and unhelpful to their case. Unsurprisingly, the applicant (or claimant) may have the more onerous disclosure obligations because they are prosecuting the case.

In the case of insolvency litigation brought by a liquidator, it will be commonplace for their disclosure to be the most time-consuming, as they will likely have all the relevant company’s records. There can be issues with this if the respondent is a director, for example, who has not satisfactorily ensured that all company records have been maintained and retained, including safeguarding all emails housed within platforms after the subscriptions may have lapsed due to non-payment.

Nevertheless, once the liquidator slips into some super spikes and storms out of those litigation starting blocks, if the claim is contested and any initial optimistic hope of attaining a quick settlement is superseded by the ensuing marathonic litigation, then they may have to ditch the spikes instead for some super shoes.

Litigation is not just lengthy but how it pans out can often be something of a lottery. 

In not untypical lengthy fashion, the liquidator in Factor started their journey on 2 April 2024 but it took until almost two years later for the marathon to culminate in a 7 day trial from 20 January 2026. However, the case did not progress as planned in January 2026 because it seems the liquidator acknowledged, due to disclosure issues, the trial would not be fair and on day one of the trial, applied for an adjournment:

The application for an adjournment was based on Mr Factor’s reflection that due to his admitted failures there could be no fair trial.

Mr Factor accepted that he had failed: (i) to comply with the order of Judge Prentis (ii) to undertake the disclosure exercise with diligence and (iii) the lack of diligence extended to a failure, among other things, to search for adverse documents. Mr Factor sought an adjournment so that he could have an opportunity to undertake re-run the disclosure exercise.

The upshot of this resulted in an order being made that, without various additional disclosures made by the liquidator, his case would be struck out. And that is exactly what happened.

Judgment Conclusion

The January Order required the Applicant to provide full and frank particulars of the disclosure exercise he undertook, the defects in that exercise, the documents within his control or obtainable from third parties, the steps taken to preserve documents, any documents lost or destroyed, and all known adverse documents. Those obligations were clear, specific, and agreed by his legal team. They were imposed because the disclosure failures identified on the first day of trial were extensive, unexplained, and went to the heart of whether a fair trial remained possible.

The witness statement served in purported compliance does not meet those obligations. It does not describe the disclosure exercise undertaken, does not identify the documents within the Applicant’s control, does not address third-party documents, does not explain preservation steps or any loss of documents, and does not identify any adverse material. These omissions are not minor or technical. They concern central categories of documents, financial records, accounting data, internal communications, and professional reports, directly relevant to the pleaded issues of insolvency, preferences, and the purpose of the impugned payments.

The failures are serious, they frustrate the purpose of the January Order, and they deprive the Respondents of the ability to understand or test the Applicant’s conduct of disclosure. No application for relief from sanctions has been made, and there is no basis on which the court could grant relief of its own motion. The breach is material and continuing.

As a result of this conclusion I shall declare that by the operation of paragraph 3(a) of the January Order the Application is struck out.