Companies House Information Sharing With Insolvency Practitioners

When an Insolvency Practitioner is investigating a company’s affairs and dealings to consider if there are any actions capable of being brought against someone to swell the assets of the company (perhaps typically the former directors), they need access to information.

This may be in short supply.

New information sharing regulations are now in force to assist Insolvency Practitioners. The Information Sharing (Disclosure by the Registrar) Regulations 2024.

Insolvency Practitioners Obtaining Information

Perhaps unsurprisingly, directors may not always be entirely forthcoming with information, particularly if they have concerns it might be used against them. The law puts them under a clear obligation under Section 235 of the Insolvency Act 1986 as a result to provide information reasonably required.

When a company goes into liquidation for example this is the effect death of the company. Other parties with information to enable the liquidator to reconstruct the company records may not stand to benefit from continued assistance to the company. As a result, it is not unknown that the extraction of information by a liquidator to be delayed and even hampered by such a commercial reality. 

Whilst Sections 234 and 235 of the Insolvency Act 1986 exist to assist, their teeth may require an application to the court under Section 236 of the Insolvency Act 1986 to compel such cooperation. This can be expensive and it can take some considerable time for the court hearing to sprout and as a result, corrective actions to recover assets might be frustrated by asset distancing. 

Section 236 Insolvency Practitioner Risks

However, the power under Section 236 is subject to the usual litigation rules on winning and losing (see our article Section 236 Strikes Again As Liquidators’ Application Dismissed), as well as matters of costs. This can leave a liquidator personally at risk and on the hook for adverse costs. 

In a case where there are few assets to fund such legal proceedings may mean a director’s mishandling of the assets could potentially defeat the liquidator’s ability to attempt to obtain the information to recover them. This appears an unsatisfactory state of affairs given a liquidator typically needs all the help he or she can get to overcome the hurdle of entering office as a stranger to the affairs of the company.

Companies House Ability To Provide Information

Section 94 of The Economic Crime and Corporate Transparency Act 2023 has brought in Section 1110F of the Companies Act 2006 which in turn introduced secondary legislation known as The Information Sharing (Disclosure by the Registrar) Regulations 2024. This provides that Companies House “may” disclose information if “satisfied” it is “necessary” to assist “make or determine” an application to court for asset recoveries available under various Insolvency Act 1986 claims such as:

• Fraudulent trading
• Wrongful trading
• Transactions at undervalue
• Preferences

What Companies House Says

In response to a Freedom of Information Act request, about how this would operate in practice, Companies House said:

… all requests of this nature will be considered on a case-by-case basis. Companies House is in the process of producing a request form which will be shared with Insolvency Practitioners to make such requests. The form will be ready within the next few weeks. A direct Companies House email address will be provided which will be accessed by the team who will be carrying out the work.

This kind of information is of the nature that should be available within a company’s own records. If however a company has not provided the same due to its record keeping, then it would seem perhaps it might have been helpful for Companies House to provide it on a must as opposed to may basis in the interests of the winding up. However, that is not what the legislation as drafted says. Its future effect will remain to be seen.