English auditors ordered to disclose audit files to liquidators

The liquidators of two companies brought an application under sections 235 and 236 Insolvency Act 1986 against the former auditor, to disclose its audit files (the Audit Files). The liquidators required the Audit Files to determine the merits of any potential claims against the auditor and/or the companies' management.

The auditor opposed the application including on the basis that the liquidators had not demonstrated a reasonable requirement for the Audit Files and the request was not sufficiently specific. 

Decision

The court found that the liquidators reasonably required the Audit Files to be disclosed to them and ordered that they be disclosed for the following reasons:

• The "self-contained" Audit Files were a unique record and captured all of the information provided by the companies to enable the audits to be performed.
• It was more cost-effective to obtain the relevant information from the Audit Files than by trying to reconstitute the companies’ records.
• By seeing the Audit Files, the liquidators can reach a reasonably informed, preliminary view as to whether the auditor met its duties to the companies.
• A company’s auditors are “probably officers of the company…" for these purposes and the case for making an order against persons with a duty to cooperate with office-holders is stronger than against a third party.
• The judge agreed the Audit Files should be disclosed even though the auditor claimed that disclosure would involve an administrative burden in terms of time, effort and costs. 

Key  takeaways 

• This decision will be a welcome authority for office-holders in addressing potential claims and will encourage requests for early disclosure through this route.  
• In this case, the judge found that the documents sought were “self-contained”. Contrast this with the recent decision in the Eversholt Rail (see our alert), where the same judge rejected a request that was too wide-ranging and unlimited in scope.

Dale and others (as joint liquidators of NMCN Plc and NMCN Sustainable Solutions Ltd) v BDO Llp [2025] EWHC 446 (Ch).

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.