Insolvency searches

Investigating a UK company

The extent of any exercise undertaken to investigate a limited company in the UK will partly depend on whether the company in question is private or public, and, if public, whether its securities are listed on an exchange or alternative trading platform. A listed company is generally required by the rules of the exchange to make available a wider range of information beyond that required by private or unlisted public companies.

For practical information on finding out information about a company, its officers and its shareholders, see Practice Note: How to investigate a UK company.

Companies

It is prudent to carry out insolvency searches against a company:

  1. following an instruction on a new matter, both in relation to your own client and to other parties (especially where you have been instructed to recover debts or damages)

  2. regularly in the lead up to the presentation of a winding-up petition or the process of appointing an administrator

  3. as part of any security review (see Practice Note: Introductory guide to security reviews)

There are three main types of insolvency searches

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Insolvency–fraudulent trading and dishonest assistance (Bilta and others v Tradition Financial Services)

Restructuring & Insolvency analysis: The Supreme Court held that liability for fraudulent trading under section 213 of the Insolvency Act 1986 (IA 1986) is not limited to directors or other persons exercising management or control over the company in question. Rather, liability can attach (as the natural meaning of section 213 admits) to any person who is knowingly party to the carrying on of the company's business in a fraudulent manner. The Supreme Court further restated that an isolated act of fraud in an otherwise legitimate business would not amount to fraudulent trading. The Supreme Court was also asked to determine whether claims in dishonest assistance, parasitic on the directors' breaches of their fiduciary duties, were statute barred under the Limitation Act 1980 (LA 1980). The claims were issued more than six years from the dates of those breaches. The claimants sought to postpone the accrual of the limitation period under the LA 1980, s 32, ie until the time the claimants either discovered the fraud or could with reasonable diligence have discovered it. On the assumed facts, and notwithstanding the intermediate dissolution and restoration of the companies, the claimants could not rely on LA 1980, s 32 and were consequently stature barred. Written by Sam Fenwick, partner, Suleika Horrocks, trainee solicitor, and Isabelle Burnett, solicitor apprentice at Wedlake Bell LLP.

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