There was good news for officeholders in the recent case of GP Cars (Herts) Limited, which concerned an application brought under section 236 Insolvency Act 1986.
The administrators of the company brought section 236 proceedings against the company’s former solicitors for delivery up of their books and records relating to the company. The court granted the application, and further awarded the administrators a large proportion of their costs of making the application.
However, the solicitors asked the court to order that the administrators pay their costs of complying with the order. The court declined to do so and the solicitors appealed.
On appeal, the decision as to refusing the solicitors’ application for compliance costs was upheld. In doing so, the court upheld previous decisions in which it is said that compliance with orders under section 236 amounts to a public duty, and therefore the starting point is that parties made subject to such orders should not have their costs paid by the applicant. This is despite the fact that parties subject to section 236 orders are “innocent parties”.
This decision will no doubt be welcomed by officeholders as enabling them to better investigate the circumstances giving rise to insolvency situations, and hopefully will enable better returns to creditors.
If you are an officeholder and require assistance in relation to section 236 applications, the team at Short Richardson & Forth are experienced in seeking compliance with section 236 both with and without the needs for court applications. Contact us on 0191 232 0283 for further assistance.