Successful request for information

Liquidators pursued an application for delivery up of information from the companies’ previous auditors. The auditors unsuccessfully objected to the application in respect of the information requested and the litigation purpose behind it.

The companies reported healthy profits up until their 2019 accounts, audited by their previous auditors, BDO. BDO had to step down from that role in 2020, having audited the companies for ten years, and were replaced by EY.

Subsequent unaudited accounts showed losses and ultimately, EY were unable to provide an audit of the companies’ 2020 accounts, and the companies ended up going into administration in 2021.

BDO provided various information to the companies’ liquidators, but not its audit files, and the liquidators applied to court for delivery up of those files, indicating that one of the reasons that they were required was to assess whether the companies had claims against BDO for breach of duty.

BDO objected to the application on the basis that the information supplied was more than sufficient to enable the liquidators to reconstitute the companies’ financial position and that it would be an abuse of the disclosure process to allow the liquidators to use investigatory powers under the insolvency legislation to effectively obtain pre-action disclosure.

The ICCJ agreed with the liquidators and found, on the facts, that the liquidators had established a reasonable request for the audit files as sight of them would enable the liquidators to establish how BDO had conducted the audit and whether they met their duties to the companies.

In addition, the ICCJ did not see how production of the audit files would breach the pre action negligence protocol, so it remains to be seen whether this decision will result in an increase of applications for delivery up in respect of potential claims.

Dale and others v BDO LLP [2025] EWHC 446 (Ch).

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