An order for oral examination may be oppressive

The joint liquidators of Farfetch Limited (a company that was incorporated in the Cayman Islands) sought relief from Article 21 of the UNCITRAL Model Law on Cross-Border Insolvency. The liquidators had indicated that they had suspicions of mismanagement. They applied to the court to require that three individuals, each of whom had been involved with the management of Farfetch i) attend an oral examination; and ii) produce documents in specified categories.

The respondents recognised that the court had the discretion to make the orders sought but emphasised that there was a balancing exercise. Two of the respondents had prepared substantive written responses to the liquidators’ written requests, and would provide further written responses to any additional questions or reasonable follow-up questions if required. However, they refused to share any answers until they had assurance regarding the confidentiality of their answers. (The respondents were concerned that the information would be shared with loan note creditors.)

In circumstances where confidentiality matter was prescribed under the law of the Cayman Islands (and the liquidators could only use information for the purpose of the liquidation), the court would approve an order containing such provisions. To do so did not fetter the power or discretion of the liquidators.

The court found that it was premature to order an oral hearing; to do so would be unfair and may be oppressive given that the respondents would effectively be required prove the case against them on oath, before proceedings had been brought. At the time of the hearing, there was no good reason why the respondents should be required to give information orally, rather than via written responses. Once the liquidators had been able to consider the documentary evidence, and written statements, application for oral examination should be reconsidered.

In relation to the third respondent, there was an issue about his residency and whether the English courts have jurisdiction; this element of the application was adjourned.
 
This case is a reminder to office holders to consider the best way to obtain the information that they require, and the need to be mindful not to use their powers oppressively.

Farfetch Ltd (In Liquidation), Re [2024] EWHC3340 (Ch) [2024] 12 WLUK 411

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