Everything forever all at once – but not always: Webb and Hussain v Eversholt Rail Limited and Norton Rose Fulbright LLP.

Liquidators are entitled to request documents and information in relation to the company, and they typically make such requests to related businesses and individuals. In this case, the liquidators wanted a sister company to produce all documents that were related to the company in liquidation in any way. The Insolvency Act gives liquidators this power, but case law sets some limits on it.

The background

Eversholt Rail (365) Ltd, or ‘365’, was part of the Eversholt UK Rails Group. Its sister company Eversholt Rail Limited, or ‘ERL’, provided 365 with all of its employees, and with administrative and asset management services, under a services agreement. ERL also held all of the documents related to 365’s business.

In August 2019, 365 entered liquidation. 365’s liquidators asked ERL for various specific documents, which ERL provided. The liquidators then decided that they wanted everything relating to 365’s business, and made very broad requests to ERL and its solicitors. When these requests were not fulfilled, the liquidators applied to the High Court of England & Wales for orders that ERL produce “copies of all documents … in its possession, custody or control relating to the business, dealings, affairs or property” of 365. This is known colloquially as an ‘everything forever’ request.

Sections 235 and 236 of the Insolvency Act 1986 place a duty on certain categories of person (including those who have services agreements with the company) to co-operate with office-holders, and entitle the court to summon any person “capable of giving information concerning” the company’s affairs to give an account of their dealings with the company. The liquidators argued that they were allowed to request information to “reconstitute” 365’s “corporate knowledge”.

However, in British & Commonwealth Holdings plc v Spicer and Oppenheim (1993), the House of Lords held that office-holders had to show that they “reasonably [require] to see the documents to carry out [their] functions” and that the request “does not impose an unnecessary and unreasonable burden on the person required to produce them”.

The decision

The court refused the liquidator’s application. Relying on the House of Lords decision, the court decided that while one of the purposes of these provisions is to allow office-holders to reconstitute the company’s knowledge, office-holders do not necessarily need to see everything in order to carry out their functions. They still need to show that they have a “reasonable requirement” for the information they are asking for. This was particularly so in this case, as ERL had already co-operated with the liquidators’ specific requests.

The court did note that there may be circumstances where office-holders can justify requests for all documents held by a particular person; however the office-holder would need to explain why they need to see that information. It would be insufficient to simply point out that someone has information that they want to see.

Conclusion

The decision does not completely shut the door on ‘everything forever’ requests. However, it does emphasise that when office-holders make a request for information – of any scale – they need to fully consider whether it can be properly justified and is proportionate.

If you would like to have a further discussion about any of these issues, or other insolvency-related matters, please contact our Commercial Disputes and Restructuring and Business Advisory teams or your usual Shepherd and Wedderburn contact.

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