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Company Records? I could tell you, but I would have to go to gaol… ?

By Chloe Howard of Matthews Folbigg Lawyers, a lawyer in our Insolvency, Restructuring and Debt Recovery Group

A company is presumed to be insolvent if it fails to keep proper financial records (section 588E(4) of the Corporations Act 2001 (Cth)).

But what if you have the records, but providing them might send you to gaol?

This issue was recently discussed in the matter of Substance Technologies Pty Ltd [2019] NSWSC 612.

In this matter, the director refused to respond to a liquidator’s repeated requests for the company’s financial records because he said the records might contain incriminating material.  He couldn’t be certain but “would suspect there could well be.” (at [42])

Justice Rees drew attention to the similarities between Sections 77(1) of the Bankruptcy Act and Section 530A of the Corporations Act. Both sections require production of records to insolvency practitioners. Her Honour noted that in Griffin v Pantzer (as trustee of the bankrupt estate of Griffin) [2004] FCAFC 113 the Federal Court had held that a claim for privilege against self-incrimination did not override the obligation of a bankrupt to provide records to a trustee in bankruptcy.
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