Division 5 of Part V of the Insolvency Act (Chapter 253) gives the trustee an investigative toolkit that is broader in some respects than a liquidator’s.
Section 83 — who may be ordered to attend
(i) the insolvent or his spouse; or
(ii) any person (A) known or suspected to have in his possession any of the estate or effects belonging to the insolvent, or (B) supposed to be indebted to the insolvent; or
(iii) any person whom the Court thinks able to give information concerning the insolvent or his trade, dealings or property,
to attend before it — or, outside the National Capital District and the Central Province, before a magistrate — and to produce any documents in his custody or control relating to the insolvent or his trade, dealings or property.
The spouse is named expressly. That is the point of difference from section 311 of the Companies Act, whose list is drawn from the company’s own circle — directors, shareholders, employees, advisers.
A creditor may apply, not only the trustee. A creditor who suspects assets have been hidden need not persuade the trustee to act.
If the person, after being tendered a reasonable sum for expenses, refuses to attend or to produce the documents without a lawful impediment made known to and allowed by the Court, the Court or examining magistrate may, by warrant addressed to a member of the Police Force or a prescribed officer, cause the person to be arrested and brought up for examination.
Sections 84 and 85 — the examination
84(1). The Court or examining magistrate may examine, or cause to be examined, on oath, orally or by written interrogatories, any person brought before it under section 83, concerning the insolvent, or his trade, dealings or property.
84(2). A person who refuses to answer to the satisfaction of the Court or examining magistrate is guilty of an offence. Penalty: imprisonment for up to six months.
85. A question put to an insolvent on any examination is not unlawful by reason only that the answer may expose him to punishment for a misdemeanour against Subdivision VI.4.A of the Criminal Code.
Section 317 of the Companies Act removes the privilege against self-incrimination generally, and substitutes a use immunity: the testimony is inadmissible in criminal proceedings against the person except on a charge of perjury.
Section 85 does neither of those things generally. It provides only that a question is not unlawful because the answer may expose the insolvent to punishment for a misdemeanour under a particular Subdivision of the Criminal Code — and it offers no corresponding immunity. An insolvent facing examination on matters that may amount to an offence should take advice before answering.
Sections 86 and 87 — orders for payment, and rewards
On the trustee’s application, the Court or examining magistrate may order a person who appears on examination to be indebted to the insolvent to pay the trustee the amount, or part of it — (a) with or without the costs of the examination, and (b) at such time and in such manner as it thinks expedient, in full discharge of the full amount or otherwise.
That is a real economy. A debt admitted or established on examination can be turned into a payment order there and then, without separate proceedings — a power the Companies Act does not give a liquidator in the same form.
A person who makes discovery, or gives information to the trustee that leads to the discovery, of any concealed property of an insolvent not previously known to the trustee, is entitled to such reward, not exceeding 10% of the value of the property so discovered, as the Court allows.
Concealed assets are usually known only to people close to the insolvent. Section 87 offers them a share — up to a tenth of the value — fixed by the Court. The property must be concealed and not previously known to the trustee, so a person who merely points at something already listed earns nothing.
Section 88 — seizure and search warrants
A person acting under warrant of the Court may (a) seize and attach any property of the insolvent in the custody or possession of the insolvent or of any other person; and (b) for that purpose break open (i) any house, building or room of the insolvent where the insolvent is supposed to be, or (ii) any building or receptacle of the insolvent where any of his property is supposed to be.
Where the Court is satisfied there is reason to believe that property of the insolvent is concealed in a house or place not belonging to him, it may grant a search warrant to a member of the Police Force or a prescribed officer.
The person seizing shall leave with the person in whose possession the property is attached (a) a copy of the warrant and (b) an inventory of the property with a notice that it has been attached.
Attached property may be removed, or secured on the premises by sealing up any repository, room or closet — in which case a person may be left on the premises in custody of it.
Breaking open premises and searching third-party property are serious intrusions, and each requires a warrant of the Court — for the search warrant under subsection (2), on the Court being satisfied there is reason to believe that property is concealed there.
The inventory and notice requirements in subsection (3) are not formalities: they are what allows a person whose goods have been wrongly attached to identify what was taken and to challenge it, including by an appeal under section 97 against the trustee’s act.
Section 89 — redirection of letters
On the trustee’s application, the Court may order that, for such time not exceeding three months from the date of the order of adjudication as it thinks proper, letters posted and addressed to the insolvent at the places specified shall be redirected, sent or delivered by the Postmaster General, or officers acting under his direction, to the trustee, or otherwise as the Court directs.
Correspondence reveals bank accounts, creditors, debtors and assets that a statement of affairs may omit. The power is time-limited to three months from the adjudication, and requires a Court order on the trustee’s application — the trustee cannot arrange it directly.
Sources
- Insolvency Act (Chapter 253) — ss 83–89, 90, 97
- Companies Act 1997 — ss 311, 316, 317
- Criminal Code Act (Chapter 262)
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.