21. Records
Records
This section contains content published after 1 January 2020. Articles published before this date can be found on the National Archives here
The Insolvency Service receives requests from Insolvency Practitioners seeking permission to close cases when all their actions have been completed. Currently the Insolvency Service receives these requests on around 10% of all insolvencies.
With immediate effect, Insolvency Practitioners no longer need to write to the Insolvency Service to request permission to close the case.
However, where the Insolvency Service is still dealing with the case, for instance if a vetting decision is outstanding or an investigation is ongoing, then the Insolvency Practitioner must ensure that the company records and their own files are preserved until such time as the Insolvency Service advises that its actions are complete, or until any legal requirement to preserve records has expired, whichever is the later.
Any enquiries regarding this article should be directed towards email: intelligence.insolvent@insolvency.gov.uk
As set out below, recent events have given us the opportunity to review guidance around retention of records, particularly where there is known to be ongoing criminal proceedings.
In a recent case that was being prosecuted by the Insolvency Service, it became apparent that records that were relevant to the case during the trial had not been retained by the insolvency practitioner despite them being asked to do so by the Insolvency Service. This resulted in an application to dismiss the case being successfully argued by the defence.
We would therefore take this opportunity to remind all insolvency practitioners that they have a duty to retain all records that they hold until the conclusion of Court proceedings. This is not limited to the company’s books and records themselves but should also include the insolvency practitioner’s internal records / file notes and particularly, those notes that record when the company’s books and records were obtained or delivered up and what was included in those records. Insolvency practitioners should be able to produce a record or inventory of how and when such records were delivered and how that was recorded appropriately. Insolvency Service representatives dealing with the investigation and resulting legal proceedings will endeavour to ensure that there are clear communications with the insolvency practitioners before, during and after Court cases so that they are aware of the status of proceedings and can act accordingly with regards to safe storage of books, records and files.
To try to ensure that future cases are not impacted by a failure to retain records, we are now reissuing guidance that had previously been issued in Dear IP no. 49 in March 2000 This guidance remains accurate and has been updated below for ease of reference:
Following consideration of reports made to the Insolvency Service under Section 218(4) Insolvency Act 1986 (and otherwise), a criminal investigation may result. The criminal investigation is carried out by investigation officers within the Insolvency Service. They are likely to contact the insolvency practitioner as part of that investigation.
The investigation officer will often wish to review the company’s books, papers, relevant case files etc and should a criminal prosecution ensue, all of the company’s records and case files will be required. These will be needed until such time as a resulting case has been heard by the Court and decided so it is imperative that where an insolvency practitioner is aware of a criminal investigation, they should retain all records and case files securely and should not destroy those records until the position has been discussed with the investigation officer and they have confirmed that the case or proceedings have concluded.
Enquiries regarding this article may be sent to:
legalservices@insolvency.gov.uk
Guidance previously issued via Dear IP has been archived due to its age. This article provides updated information, reflecting current processes.
A site with FSC status (previously known as ‘List X’) is a commercial site (i.e. not government) on UK soil which is approved to hold UK government classified assets marked SECRET and above. There are a number of businesses in the UK carrying out contracted work on behalf of government departments, including the Ministry of Defence, on FSC sites. Some of these sites contain high-grade encryption equipment and codes.
Should an individual, company or partnership trading on a FSC accredited site enter an insolvency procedure, it is essential, in the interests of national security, that all classified assets are protected and not moved without the relevant security clearance provided by the owning Government Department.
Defence Contractor FSC sites have their status granted and monitored by the Industry Security Assurance Centre (ISAC) in MOD following Cabinet Office
guidance. When entering an insolvency procedure, the recovery of classified assets from a FSC site is usually undertaken by representatives of the owning contracting authority, overseen by the ISAC.
It is possible that a business trading from a FSC site has other general trade contracts and not just government contract(s) that has resulted in the FSC site status. A business trading from a FSC site may have one or more other FSC facilities at other trading addresses. Alternatively, a business that has a FSC site may have other trading addresses which are not certified as FSC as the FSC status is site specific (i.e. the site where the contract is being carried out) and not business specific.
Insolvency practitioners should allow contracting authority and/or ISAC personnel to secure and remove all items relating to the relevant government contract. They also may need to work closely with ISAC to ensure that the interests of national security are protected, and that all items are secured to the satisfaction of ISAC or until collection can be arranged if it cannot be carried out immediately. Such action is a priority to any steps the insolvency practitioner would normally take in their capacity as insolvency officeholder to realise the equipment for the benefit of the insolvent estate.
Should insolvency practitioners become aware of insolvent businesses that are trading, or have traded from, a FSC site immediate contact should be made with the ISAC via email at ISAC-Group@mod.gov.uk.
Following initial contact with the ISAC, arrangements will usually be made for either the Contracting Authority, ISAC or the local police to attend the FSC site.
Insolvency practitioners should allow contracting authority and/or ISAC personnel to secure and remove all items relating to the contract, even where this may result in computer equipment or stock being lost to the insolvent estate. In all cases, an inventory of all material and equipment recovered, together with written confirmation of overriding national security interests, will be provided by either the Contracting Authority or ISAC.
Details of the UK Government contracting authorities are available from the company’s designated Security Controller or Board Level Contact. Where details are not known of the Security Controller, Board Level Contact and/or Defence contracting authorities, the insolvency practitioner can request details from the ISAC.
Enquiries regarding this article may be sent to: ISAC-Group@mod.gov.uk
More information can be found from their website at: https://www.gov.uk/guidance/industry-security-assurance-centre