English Court permits liquidators to share confidential information

A recent judgment has considered office-holders' rights to provide documentation obtained using their statutory powers of investigation to assignees to use in pursuing the assigned cause of action.

Background

The liquidators of Solstice Limited (the Company) identified wrongdoing by ex-management including the diversion of funds from the Company's bank accounts. The Liquidators assigned all claims to a litigation funder, Asertis Limited (Asertis) who issued proceedings against the ex-management (the Respondents). 

Confidential information

The Liquidators provided Asertis with personal bank statements of the Respondents, which evidenced their claim that Company money had been wrongfully diverted. The Respondents disputed Asertis' right to use these bank statements as they contained confidential information and they had not consented to their use. 

Decision

The court held that:

• Whilst a liquidator is subject to an implied duty of confidentiality for documents obtained using statutory powers, this duty is qualified and cannot prevent the performance of duties.
• Parliament had intended to provide an office-holder with the ability to sell causes of action that would benefit the insolvent estate. Accordingly there is a public interest in ensuring the free flow of information.
• The bank statements should be made available to Asertis for the purpose of satisfying the burden of proof at trial. 
• To balance the rights of the Respondents, personal information in the bank statements would be redacted. 

Key takeaways

Office-holders should consider whether to seek permission to provide confidential information to an assignee, who must also decide if permission is required to use it. Whilst permission will usually be granted, each case will be fact sensitive. 

Asertis Ltd v Melhuish [2024] EWHC 2819 (Ch)