Section 234 and 236 orders—who pays for the costs of complying?

Section 234 and 236 orders—who pays for the costs of complying?

Why did Mr Registrar Jones decide not to allow the respondents in Re Harvest Finance Ltd to charge for the time incurred in delivering documents and electronic files to the liquidators of Harvest Finance Ltd pursuant to an order made under the Insolvency Act 1986 (IA 1986), ss 234 and 236? Rory Brown, barrister at 9 Stone Buildings who acted for the liquidators, discusses the court's decision.

Original news

Re Harvest Finance Ltd (In Liquidation); Jackson and another v Cannons Law Practice LLP and others [2014] EWHC 4237 (Ch), [2014] All ER (D) 216 (Dec)

Following successful application for relief by liquidators under the IA 1986 , ss 234 and 236, the Companies Court considered whether it had jurisdiction to order payment of expenses incurred by the respondent solicitors in complying with an order for the delivery up of documents and electronic files. The court held that, in the circumstances, it should not, in the exercise of its discretion, allow the respondents to charge for the time incurred.

What was the background to the application?

The applicants were liquidators of a company suspected to have been used as a vehicle for a massive international fraud, relating to loans charged on securities with apparently artificially inflated values. The respondents were a solicitors' firm and its solicitors personally who had acted (or had in a previous incarnation acted) for many of the special purpose vehicles created in pursuance of the scheme under investigation. The application (made under the IA 1986, ss 234 and 236) was, broadly speaking, for identification and retrieval of documents under the respondents' control and required by the liquidators to investigate that suspected fraud.

It is important at the outset to note that it was not found by the court that the respondent solicitors had any knowledge of, or any hand in, any fraud.

What were the legal issues that the Registrar had to decide in

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login

About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.