Legal Advice on the Duty to Cooperate

When does this duty apply?

When a company enters into administration, administrative receivership, provisional liquidation or liquidation, certain parties are obliged to give information to the office-holder, pursuant to s 235 of the Insolvency Act 1986 (the Act).

This duty applies from the date the company enters into one of the above detailed (the effective date).

Who is this duty owed by?

This duty is owed by:

• Officers and former officers of the company (directors, managers, secretaries);

• Those who have taken part in the formation of the company at any time within one year prior to the effective date;

• Employees and those who were employed within one year before the effective date who are, in the office-holder’s opinion, capable of giving the information required. This includes those who have been employed under a contract for services;

• Officers and employees of another company that is (or was within the year before the effective date) an officer of the company; and

• In compulsory liquidation, any former administrator, administrative receiver or liquidator.

Who is this duty owed to?

This duty is owed to ‘office-holders’, as described in the Act. This means those appointed under the insolvency route that the company is subject to. For example: the liquidator, administrator, receiver etc.

What is the duty to cooperate?

The office-holder will make contact and request information or attendance at a meeting, whilst referring to s 235 of the Act. Those contacted are obliged to provide this information or attend the meeting.

What are the consequences of failing to comply?

In the event of non-compliance, the office-holder may apply to the court for an order enforcing compliance. The court will then decide whether the information or attendance is reasonably required.

If a person fails to comply with this duty without reasonable excuse, he/she is liable to a fine.

How is the information obtained used by the office holder?

The information should be used by the office-holder in accordance with their functions as an office-holder. For example, investigating a misfeasance claim or realising assets.