Private & Public Examinations
Public examinations are examinations of persons who have been involved in the liquidation (the death of a company) or in bankruptcy (an insolvent individual).
These examinations are requested by the Official Receiver via an application to the Court.
An Official Receiver is an officer of the court and a civil servant who deals with bankruptcies and compulsory company liquidations.
Have you been called to attend a public or private examination? Or are you an insolvency practitioner who needs to call someone to be examined?
Why are Public Examinations Used?
They are needed when Companies have come to an end and the persons who managed the Companies (who are therefore responsible for the Companies state of affairs) should be subject to public examination.
If you are a director and your company is in liquidation it is likely that you will be called for an examination.
The Official Receiver may decide to apply for an examination during liquidation at any time before the company becomes dissolved. In bankruptcies they can apply any time before the bankrupt is discharged.
Can I get out of attending a Public Examination?
An application can be made to set aside [remove] an order for examination by the person who is to be examined.
The Court has to consider a number of factors when considering the application.
What happens during examination - what kind of questions will be asked?
The Court is to gather evidence from the person being examined; questions are not put to strengthen a party’s case.
The questions are not limited to one issue but the questions can be wide ranging provided that they are relevant to the affairs of the insolvent company or individual.
The examination is held in open Court and Judge before whom it is held has discretion to determine how the examination is to be conducted and what questions can be asked.
At the examination the following are able to take part and ask questions: the person overseeing the liquidation of a company, trustee in bankruptcy (the person who has taken over the bankrupt’s affairs), any person who has been appointed as a special manager of the insolvent’s property or business and any creditor [person or company who is owed money].
The person who is being examined (“examinee”) is being questioned under oath and must answer all questions. A refusal to answer on the basis of self-incrimination means that the examinee is in contempt of Court.
Failure to attend the examination is considered a contempt of Court which is a criminal offence.
What is a Private Examination?
The Official Receiver and other “office holders” have the right to apply to have certain persons examined in private.
An office holder is an individual who is appointed when a Company is in administration, receivership or liquidation to conduct the Company’s affairs.
Why are Public Examinations Used?
The office holder will be seeking to get information about matter which the books of the company or the bankrupt have failed to disclose.
The person being questioned is bound to answer incriminating questions.
These examinations tend to be the last resort for an office holder. An examination may be sought because there has been a refusal to attend an informal interview or to answer questions informally.
1. They may want answers to questions on oath feeling that the answers will have greater validity;
2. They may want answers on oath and recorded in court transcript to be used as evidence in further proceedings against the examinee, or to be of assistance in prosecuting proceeding. An example of prosecuting proceedings could be where they wish to issue proceedings against a creditor where there has been a preference in payment; &
3. Where there may be grounds for commencing proceedings against promoters, managers or others involved with an insolvent company during its life or liquidation. Or against the associates of a bankrupt in bankruptcy.
The examination process is aimed at allowing the office holder to carry out all aspects of the insolvency administration (of a company or an individual) including discovering and getting in any assets.
The examination is also to allow the office holder to ascertain whether any substantive proceedings can be started and to allow for the investigation of any misconduct.
Can an order for Private Examination be set aside?
A person who has been ordered to come before the Court to be examined may apply to set aside the order.
The grounds for setting aside an order for private examination are generally that they believe the examination would be unreasonable or oppressive.
What happens during examination?
The process is similar to that described above for public examinations.
Whilst the range of questioning can be quite wide, the courts are careful not to permit unnecessary or unfair impinging of the examinee’s rights.