Most corporate cross border work follows a similar pattern. A company owes significant sums to investors and/or creditors. The former management has relocated to a different jurisdiction. It is for someone to pick up the pieces and investigate the reasons for the insolvent company’s demise, including whether any recoveries can be made for corporate malfeasance.
This article is the second in a series exploring the enforcement of foreign claims in England and Wales. This article focuses on the assistance that the Courts of England and Wales will provide to Foreign Representatives, who are usually tasked with bringing claims on behalf of foreign investors and/or creditors in cases of corporate malfeasance.
Office-holders
To understand the relief available to Foreign Representatives, it is first helpful to set out the role of an “office-holder” in England and Wales. An office-holder is usually a licensed insolvency practitioner who is appointed when a company encounters financial difficulty or following an order of the Court.
For example, following the recent judgment involving Michelle Mone in PPE Medpro Limited [2025] EWHC 2486 (Comm), the Secretary of State for Health and Social Care (“DHSC”) has obtained judgment of £128,099,180. If Medpro cannot pay this debt, DHSC can petition for the winding-up of Medpro and seek the appointment of an office-holder, in this case, a liquidator.
DHSC might have some difficulty with obtaining this appointment because a company incorporated in the British Virgin Islands, Perree (PTC) Limited (“Perree”), has a charge over Medpro. Under the terms of that charge, Perree has a right to appoint its own office-holder, in this case an administrator.
Recent news outlets suggest that Perree has already taken steps to appoint its chosen administrator. DHSC might dispute the validity of this appointment because Perree has connections with Mr Barrowman and Mrs Mone (see paragraphs 58, 90 and 124 in PPE Medpro Limited).
It may be that the DHSC and Perree are embroiled in more litigation to determine which office-holder is appointed (i.e. DHSC’s liquidator or Perree’s administrator).
In either case, the office-holder owes their duties to the creditors of the company. Where corporate recovery is not possible, the office-holder must realise the assets of the company and distribute the proceeds to the company’s creditors.
The company’s assets might include claims against its former management, which the office-holder is required to investigate and pursue if appropriate. In cases of corporate malfeasance, the company’s largest assets might be its claims.
Office-holder’s Powers
As part of investigating whether there are claims worth pursuing, the office-holder will need to obtain all the information and documents so they can review the affairs of the company. This usually involves obtaining the information and documents from the individuals who formerly managed the company and third parties, such as banks, lawyers, accountants and auditors.
The usual approach is for office-holders to review the company’s bank statements and “follow the money”. Office-holders will investigate the underlying purpose of large transactions and seek information from the recipients of the company’s funds. If a transaction lacks a commercial basis, and appears designed to defraud creditors, this could lead to claims.[1]
Naturally though, the former management can be unwilling to cooperate with an office-holder investigation. Office-holders must therefore rely on their statutory powers to obtain delivery up of information and/or documents. This is usually achieved by the powers contained under sections 234-6 of the Insolvency Act 1986, which includes requirements for:
· Any person to deliver to the office-holder any of the company’s property, books, papers or records, if that person has them in their possession;
· Specific persons (involved with management, formation of or under the employment of the company) to provide information to the office-holder as the office-holder may reasonably require (including by a recorded interview with the office-holder, known as private examination).
If an individual unlawfully refuses to comply with an office-holder’s request, the office-holder can obtain a court order enforcing compliance.
It is far too early to speculate on the scope of an office-holder’s investigation and whether they will discover any wrongdoing by the management of Medpro.[2] However, the office-holder is duty-bound to consider any claims as part of their investigation into the company’s affairs.
Foreign Assistance
Now that we have an overview of the roles of office-holders in England and Wales, we can move onto the Cross Border Insolvency Regulations 2006 (“CBIR”). CBIR enables the Courts of England and Wales to aid a foreign office-holder, known as a “Foreign Representative”, in their investigations.
Therefore, upon recognising the validity of a foreign proceeding, a Foreign Representative can further their investigations in this jurisdiction by relying on CBIR, which enables the Court of England and Wales to:
· Provide any relief that might be available to a British insolvency officeholder (Article 21.1.(g)); and
· Provide for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities (Article 21.1.(d)).
A Foreign Representative will be entitled to this relief “where necessary”, which is the same as the “reasonable requirement” test for an office-holder in this jurisdiction (see above).
Resisting requests for information
A respondent to an office-holder’s (or Foreign Representative’s) request for information and/or documents can resist such a request. The usual defence to providing information concerns the oppression that the request might cause to the respondent.
For example, an office-holder might use their powers to obtain documents and information from the respondent when the office-holder has already decided to bring claims. The office-holder will not be using their powers for a proper purpose, instead using those powers to obtain a litigation advantage.
The Courts are unlikely to grant an office-holder’s request when there is a clear intention by the office-holder to bring claims. The proper forum to obtain this evidence is in the legal proceedings themselves, which have procedural rules to ensure fairness and a fair trial.
A respondent may also withhold documents from the office-holder if those documents are covered by legal professional privilege belonging to the respondent. Essentially, if the respondent sought advice in a personal capacity in relation to matters involving the company, those documents can be withheld from the company.
About us
This article does not constitute legal advice and you should obtain specific advice that is applicable to your own circumstances. Child & Child has represented office-holders and former managers of companies under investigation and is part of a wider network of international lawyers who handle complex, difficult litigation cases.
If you are an individual or international lawyer interested in discussing the content of this article in more detail, please contact Nick Goldstone, Philip Cohen, Vikash Savani or Laurence Crees in our Dispute Resolution Team.
If you are an individual concerned about your assets in light of an ongoing investigation, please contact Rhea Rughani, Colin Glass or Vincenzo Mazzone in our Private Wealth Team.
[1] There are more specific claims available to office-holders in England and Wales but these are outside the scope of this article.
[2] The scope of any investigation is likely to depend on the appetite of the office-holder tasked with carrying out the investigation.
