S.235 and S.236 Insolvency Act 1986: A Director’s Complete Guide 2026

Sections 235 and 236 of the Insolvency Act 1986 represent two of the most potent investigative instruments available to insolvency office-holders once formal proceedings have been commenced against a company. Section 235 establishes a statutory obligation to co-operate, binding directors, former officers, employees, and other connected individuals to furnish the liquidator or administrator with information and records as reasonably required. Section 236, meanwhile, empowers the court itself to compel attendance for examination on oath and to mandate the production of documents. These provisions are routinely engaged following the presentation of a winding-up petition, the appointment of administrators, or in the course of asset recovery proceedings. Directors who obstruct or fail to engage meaningfully face sanctions ranging from cost orders to disqualification. Grasping the practical limits and procedural safeguards of these sections is therefore critical, whether in the context of an HMRC-driven winding-up investigation or a broader insolvency litigation dispute. Directors in receipt of such demands should seek specialist legal representation without delay.

Understanding S.235 And S.236: What Do They Actually Do?

Sections 235 and 236 of the Insolvency Act 1986 operate in tandem, yet each performs a distinct function. Together, they create a framework through which office-holders can reconstitute knowledge of a company’s affairs after it has entered formal insolvency proceedings.

Section 235 places a positive, statutory duty of co-operation upon an identified class of individuals. That class includes present and former officers of the company, its employees, any promoters, and any person who has been involved in the company’s formation or management. Each of those individuals must provide information about the company’s affairs, attend upon the office-holder when required, and deliver up books, records, and any property of the company — all to the extent that is “reasonably required” for the office-holder to fulfil their statutory functions.

Crucially, the qualifier “reasonably required” is not mere formality. The statutory language deliberately confines the duty to what is necessary for identifiable investigative purposes, whether that be locating assets, examining potential misfeasance, or preparing a report on director conduct. The obligation does not extend to wholesale information disclosure that serves no defined investigative aim.

Section 236 escalates the position by vesting compulsive power in the court. Under this provision, the court may summon before it officers and former officers of the company, any person believed to be holding company property, and any individual capable of providing relevant information about the company’s promotion, formation, dealings, business, affairs, or property. The court may then order production of documents and, where appropriate, conduct examinations on oath. Proceedings under s.236 are typically heard in the Insolvency and Companies Court (ICC) or in the High Court.

A notable feature of these provisions is that they effectively bypass the ordinary protections afforded by corporate separate legal personality. Individuals cannot shelter behind the company’s distinct legal identity to avoid scrutiny. However, this reach is not unlimited: legal professional privilege remains inviolable, and the court’s power must be exercised proportionately and judicially.

In operational terms, s.235 tends to be used first, in the early stages of liquidation, as an informal mechanism to obtain co-operation voluntarily. Where that approach fails, or where a director evades engagement, office-holders may escalate to a formal s.236 application. Directors receiving any such demand should instruct experienced insolvency solicitors at the earliest practicable moment.

Who Falls Within The Scope Of These Provisions?

The reach of sections 235 and 236 extends considerably further than many directors appreciate. Current directors are the most obvious category, but former directors, including those who resigned months or years before the commencement of insolvency proceedings, remain firmly within scope. Shadow directors and de facto directors (those who exercised directorial functions without formal appointment) are equally exposed. Company secretaries, senior managers, and individuals involved in the company’s promotion or formation are also included.

Beyond the immediate corporate circle, section 236 extends its reach to third parties. Banks, professional advisers, solicitors acting for the company, group companies, and even family members who hold company property may be the subject of court-ordered disclosure applications where they possess information bearing on the insolvent company’s affairs. Applications against professional advisers routinely attract careful judicial scrutiny, partly because of the privilege issues they raise and partly because of the sensitivity of professional relationships.

These powers arise exclusively once formal insolvency proceedings have commenced. The principal triggers are compulsory liquidation following the granting of a winding-up order, a Creditors’ Voluntary Liquidation (CVL), a Members’ Voluntary Liquidation (MVL) where issues subsequently emerge, administration appointments, and the appointment of a provisional liquidator pending a winding-up hearing.

Directors facing a petition at any of these stages would be well served to obtain urgent legal advice before the position progresses to formal liquidation, at which point s.235 and s.236 powers take immediate effect.

Case Law And Enforcement: Where Are The Boundaries?

The “Reasonably Required” Standard In Practice

A landmark 2026 decision has brought renewed judicial focus to the limits of liquidator disclosure demands. In Webb v Eversholt Rail Limited [2026] EWHC 101 (Ch), the High Court upheld a refusal by an ICC Judge to grant a liquidator’s application that had been characterised by the court as seeking “everything forever.” Sir Anthony Mann confirmed that office-holders must demonstrate, with particularity, that the information sought is “reasonably required” for a defined investigative purpose. He rejected the contention that a liquidator is entitled to demand wholesale reconstruction of a company’s knowledge base simply by invoking the reconstitutive purpose of sections 235 and 236. The court placed proportionality and evidential specificity at the heart of the analysis.

This ruling reinforces a consistent line of judicial thinking: liquidators must identify their lines of inquiry with clarity and explain how each category of documents sought relates to those inquiries. Blanket requests of indefinite temporal scope will face robust resistance in the courts.

The Evidence Threshold For s.236 Court Orders

The courts have long insisted that section 236 must not be deployed as an instrument of oppression, nor used as a substitute for standard disclosure mechanisms in anticipated civil litigation. When assessing whether to grant an order, judges weigh whether the material requested relates to identifiable issues under investigation, whether the scope of the request is proportionate to those issues, whether the respondent has reasonable alternative means of challenging the request, and what practical burden compliance would impose. The established judicial formulation, that s.236 must be exercised “judicially and not oppressively”, remains the governing standard. Throughout 2024 and 2025, the Insolvency and Companies Court maintained close scrutiny of applications, particularly those targeting third-party professional advisers.

The Consequences Of Non-Compliance

Failure to comply with a s.235 request exposes a director to court enforcement proceedings, including fines and escalating daily default penalties. Persistent or wilful non-cooperation may generate adverse costs orders and findings of misconduct in the company’s affairs. Where a court order has been made under s.236, non-compliance graduates into contempt of court — a matter of considerable gravity that can lead to financial penalties or, in serious cases, imprisonment.

The longer-term consequences deserve equal attention. The office-holder’s report to the Secretary of State, which informs director disqualification proceedings under the Company Directors Disqualification Act 1986, will inevitably reflect any pattern of obstruction, delay, or incomplete disclosure. Courts treat such conduct as capable of evidencing unfitness to act as a director.

There is also a downstream litigation exposure. Information gathered in the course of s.235 or s.236 processes may subsequently underpin claims for misfeasance, wrongful trading under s.214 of the Insolvency Act 1986, or professional negligence. Early engagement with experienced insolvency litigators can substantially reduce these risks. At LEXLAW, our insolvency specialists regularly challenge disproportionate requests and negotiate reduced scopes to protect directors from overreach.

Defending Or Limiting A Section 235 Or 236 Request

Directors are not without recourse. The statutory safeguard of “reasonably required” gives respondents a meaningful basis on which to challenge or qualify the scope of any demand. A director may advance a reasonable excuse for non-compliance, for example, that they do not in fact hold the requested documents, that compliance within the specified timeframe is genuinely impractical, or that the volume and breadth of the request imposes a disproportionate burden. Legal professional privilege, where it properly applies, cannot be overridden and must be carefully and promptly invoked.

Where requests are expressed in vague or sweeping terms, respondents may seek written clarification from the office-holder, propose a narrowed or staged scope of disclosure, or, if necessary, apply to the court to have the demand curtailed. Judicial expectations have evolved: office-holders are increasingly required to specify the categories of investigation to which their requests relate.

Proactive and strategic engagement frequently prevents escalation to formal court proceedings. In other circumstances, a formal challenge becomes unavoidable and is the only effective means of resisting misuse of these powers. Such decisions require the guidance of specialist insolvency lawyers well-versed in the procedural landscape.

Wider Implications For Directors And Businesses

The enforcement climate has intensified markedly in the post-pandemic period. Government-led campaigns targeting “phoenixism,” the misuse of Bounce Back Loans, and the recovery of outstanding tax liabilities have each contributed to a more assertive investigative posture on the part of insolvency office-holders and HMRC. As the largest unsecured creditor in many insolvencies, HMRC routinely supports liquidators in the pursuit of recovery actions against directors. Requests under sections 235 and 236 are increasingly used as precursors to wrongful trading or breach of duty claims.

There is also potential interplay with confiscation regimes under the Proceeds of Crime Act 2002 where fraud is alleged. Where court-imposed penalties remain unpaid, civil enforcement measures including charging orders or personal bankruptcy proceedings may follow. Directors must treat any information request from a liquidator or administrator as a legally material event requiring prompt professional attention.

Practical Steps For Directors Upon Receiving A Request

Upon receipt of a s.235 request, the immediate priority is to review its scope with care. Directors should establish precisely what documents are sought, over which time periods, and for what stated investigative purpose. It is important to document, contemporaneously, the director’s actual position regarding possession of and access to the materials requested. If compliance presents practical difficulties, for instance, because records are held by third parties or systems have been decommissioned, those difficulties should be recorded clearly and promptly communicated.

Specialist legal advice should be obtained without delay. Early engagement by solicitors can prevent inadvertent concessions, guard against the unintentional waiver of legal professional privilege, and open channels for negotiating a proportionate scope of disclosure. In appropriate cases, staged or phased disclosure can be agreed, allowing directors time to comply without conceding that the original request was properly framed.

If a s.236 application is threatened or issued, urgent court representation may be essential. The speed with which a director responds can materially influence the court’s perception of their conduct and the outcome of any hearing.

Instruct Specialist London Insolvency Lawyers

Insolvency investigations under sections 235 and 236 demand a combination of deep statutory knowledge and tactical judgment that comes only with sustained experience in this field. LEXLAW is recognised for its qualified team, whose members hold both solicitor and barrister qualifications and bring advocacy experience to bear in complex insolvency litigation matters.

Our lawyers appear regularly in the Insolvency and Companies Court, defending directors against expansive and disproportionate disclosure demands and resisting disqualification proceedings. We have particular depth of experience in urgent winding-up scenarios, contested liquidations, and HMRC-led investigations. Directors facing a s.235 or s.236 demand are encouraged to contact us immediately for an assessment of their position and a clear strategic response.