If you are a creditor of an insolvent company or a bankruptcy, Oliver Elliot can help you address your concerns arising from the insolvency and section 235 of the insolvency act 1986 can help.
How can a Liquidator use Section 235 of the Insolvency Act 1986 to investigate a company’s financial affairs?
Section 235 of the Insolvency Act 1986 is the Section that enables an Insolvency Practitioner to obtain information from an insolvent company’s (one applicable to Liquidation or Administration in this scenario) former officers and agents who have acted on its behalf by creating a duty to cooperate. Sections 234, 235 and 236 of the Insolvency Act 1986 are all interlinked.
Section 235 of the Insolvency Act 1986 can be used to obtain information from such parties having information relevant to the insolvent company’s financial affairs that the Insolvency Practitioner reasonably requires. The Section is mandatory because former officers and agents who have acted on behalf of the insolvent entity have a duty to cooperate with the Insolvency Practitioner.
Duty to co-operate with office-holder.
(1)This section applies as does section 234; and it also applies, in the case of a company in respect of which a winding-up order has been made by the court in England and Wales, as if references to the office-holder included the official receiver, whether or not he is the liquidator.
(2)Each of the persons mentioned in the next subsection shall—
(a)give to the office-holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office-holder may at any time after the effective date reasonably require, and
(b)attend on the office-holder at such times as the latter may reasonably require.
(3)The persons referred to above are—
(a)those who are or have at any time been officers of the company,
(b)those who have taken part in the formation of the company at any time within one year before the effective date,
(c)those who are in the employment of the company, or have been in its employment (including employment under a contract for services) within that year, and are in the office-holder’s opinion capable of giving information which he requires,
(d)those who are, or have within that year been, officers of, or in the employment (including employment under a contract for services) of, another company which is, or within that year was, an officer of the company in question, and
(e)in the case of a company being wound up by the court, any person who has acted as administrator, administrative receiver or liquidator of the company.
(4)For the purposes of subsections (2) and (3), “the effective date” is whichever is applicable of the following dates—
(a)the date on which the company entered administration,
(b)the date on which the administrative receiver was appointed or, if he was appointed in succession to another administrative receiver, the date on which the first of his predecessors was appointed,
(c)the date on which the provisional liquidator was appointed, and
(d)the date on which the company went into liquidation.
(5)If a person without reasonable excuse fails to comply with any obligation imposed by this section, he is liable to a fine and, for continued contravention, to a daily default fine.
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