Powers of interim managers when an investment scheme goes awry

ICC Judge Barber appointed interim managers in relation to four companies (the Companies) within a group run by Gavin Woodhouse (Woodhouse), including North Powerhouse Developments Limited (NPD), pending the outcome of administration applications issued by creditors.

On the application of the interim managers, Norris J considered the procedure necessary to remove Woodhouse from other companies within the group, and access to privileged and confidential information held on Woodhouse’ personal devices.

Power to remove

The general power to remove had been included in a previous order. The interim managers were authorised to use its assets, including shareholdings, to achieve one of the statutory objectives of administration. Woodhouse’s case was that the interim managers could only remove him as director by acting in accordance with Sections 168 and 169 of the Companies Act 2006, which requires an ordinary resolution on special notice and would allow him to be heard.

Paragraph 13 of schedule B1 to the Insolvency Act 1986 gives the court the power to make “any other order which the court thinks appropriate”. Norris J found that wide enough to allow the court to confer the power to remove Woodhouse as a director on the interim managers. Further, it was not necessary to comply with the procedural requirements of CA2006 where the removal in the interests of the administrations as a whole. In this instance, as Woodhouse had been seeking to transfer funds from subsidiary companies to his personal account for the payment of legal expenses, his immediate removal was appropriate.

Privilege and confidential information

Woodhouse was ordered to deliver-up personal devices as part of the investigations. Norris J acknowledged that the devices would contain material that was privileged and confidential.

Interim managers would use the disclosure software to conduct a search using agreed terms. Files that related to Woodhouse personally, or to one of his other companies, would then be excluded. Any issues remaining about inspection of the documents were to be decided by the court. Norris J qualified that Order; all materials relating to the legal files relating to the NPD Group could be inspected without question; given that these dealt with the receipt and application of investors’ money, there was no question of privilege.

MBI Hawthorn Care Limited (Duffy and another v Woodhouse) [2019] EWHC 2365 (Ch)

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