Information obtained by compulsion can be shared between officeholders of connected estates (parent/subsidiary)
There must, however, be a possibility that there will be a surplus in the subsidiary estate
The prospect must be real as opposed to fanciful
Mikhail Shlosberg, a Russian businessman domiciled on England, was made bankrupt and Webinvest Limited, a company beneficially owned by Mr Shlosberg, was placed into liquidation - both by the same creditor. Partners from the same firm were appointed as trustees in bankruptcy and liquidators, with one insolvency practitioner (“IP“) common to both. The same law firm acted for both the trustees and the liquidators.
The trustees had obtained documents pursuant to their statutory powers of compulsion which would, given the common IP across both estates, automatically be shared with the liquidators and their solicitors.
Given that information obtained under an insolvency officeholder’s compulsory powers are confidential and can only be used for the purpose for which the statutory powers were conferred, the officeholders applied for directions regarding the use of that information.
The court noted that appointing the same officeholders in related insolvencies was not uncommon given the associated efficiencies and had been approved at the highest level (by the Privy Council).
The court expressed the view that where information was obtained by an officeholder of an estate which held shares as part of that estate, the officeholder could share that information with the insolvency officeholder appointed to the company in which the shares were held where there was a prospect of there being a surplus in the estate which was real as opposed to fanciful.
While this is a helpful judgment in respect of the specific circumstances of the case, questions still remain where confidential information is not to be shared in a parent/subsidiary context and/or it is clear the subsidiary will not be solvent (and therefore there is no prospect of a surplus).