High Court allows private hearing for administrators

10 Feb 2025Court Report

The High Court permitted a private hearing for company administrators to protect sensitive information during insolvency proceedings

Background of the case

On 6 February 2025, Deputy ICC Judge Baister delivered a judgment in the High Court regarding an application by the joint administrators of a company, appointed on 26 November 2024. The company, part of a larger group, did not engage in trading but held substantial assets in the form of shares and debts from group companies. The administrators sought orders to exclude creditor information from public records, conduct the hearing in private, and extend the time for filing necessary documents.

Application for private hearing

The administrators argued that public disclosure of creditor information could adversely affect the sale of valuable assets. They requested a private hearing under CPR 39.2(3), citing that publicity would defeat the hearing's purpose and involve confidential information. Judge Baister agreed, recognising the potential commercial detriment and the confidential nature of the information, thus warranting a departure from open justice principles.

Exclusion of creditor information

The administrators also applied to exclude creditor information from the statement of affairs, invoking Rule 3.45 of the Insolvency (England and Wales) Rules 2016. The court found that disclosure could prejudice the administration's conduct, aligning with precedents like All Leisure Holidays Ltd and Registrar of Companies v Swarbrick, which supported limiting disclosure to protect commercial interests.

Extension of time

Additionally, the administrators sought an extension of time under Sch B1 paragraph 49(5) of the Insolvency Act 1986 to file the statement of affairs and proposals. The court granted this extension, acknowledging the need for further advice on asset valuation and sale strategies, which justified the delay.

Legal principles considered

Judge Baister referenced several cases, including Re Shuldham and Re Peter Jones (China) Limited, emphasising the importance of assessing the confidential information's nature, its significance, and potential damage from disclosure. The court balanced these factors against the principles of open justice, ultimately deciding in favour of limited disclosure.

Commercial considerations

The judgment highlighted the court's ability to consider commercial factors, such as potential competitive disadvantage and the impact on asset realisation. This approach was consistent with prior rulings like Re TenetConnect Limited and Bulb Energy Limited, where commercial sensitivity influenced the court's decision.

Implications for creditors

Judge Baister noted that the creditors were few and known to each other, minimising the risk of impeding their communication. The court also allowed for the possibility of affected parties applying to vary or discharge the order, ensuring procedural fairness.

Conclusion

The High Court's decision underscores the judiciary's careful consideration of confidentiality and commercial interests in insolvency proceedings. By allowing a private hearing and limiting disclosure, the court aimed to protect the administration process while upholding creditors' interests.