Eversholt Litigation: A Reminder of the Limits of Office Holder Powers Under Sections 235 and 236 IA 1986

The recent decision in Webb and another (as joint liquidators of Eversholt Rail (365) Ltd (in liquidation)) v Eversholt Rail Ltd and another company [2026] EWHC 101 (Ch) (“Eversholt”) provides a timely and important reminder of the limits of an office‑holder’s power to obtain information under sections 235 and 236 of the Insolvency Act 1986 (“IA 1986”).

Both the first‑instance judgment and the High Court appeal confirm that the statutory framework does not confer an automatic right to “everything relating to the company”. Liquidators must demonstrate a reasonable requirement for the material they seek, supported by evidence and such requests must be proportionate to the company’s operational circumstances. 

This decision offers guidance on how targeted a request must be, the balancing exercise to be undertaken pursuant to section 236 IA 1986, and why the purpose of “reconstituting the company’s knowledge” cannot, on its own, justify unfocused or oppressive demands.

For restructuring and insolvency practitioners, this decision reinforces the need for clarity, justification, and proportionality when seeking information from group companies or professional advisers. 

Background

This case involved two sister companies within the Eversholt UK Rails Group (“Group”): Eversholt (365) Limited (“365”) and Eversholt Rail Limited (“ERL”). The Group leased railway engines and carriages to various train operating companies. 

As a special purpose vehicle, 365’s role was to hold part of the Group’s train fleet. It had three directors, all of whom were also directors of companies within the Group including ERL. 365 had no employees and operated entirely through services provided by ERL under a service agreement. As a result, documents relating to 365’s business were held by ERL and were not segregated from documents belonging to other companies in the Group for whom ERL also provided services. 

On 29 August 2019, 365 entered creditors’ voluntary liquidation. Following appointment to office, the liquidators encountered significant difficulties: 365 held virtually no documents of its own, and they were therefore unable to properly understand its business or affairs. The liquidators initially requested documents from 365 and received some material, but further requests were made to both ERL and the Group’s legal advisors. 

Over the course of four years, a series of protracted requests and responses followed. ERL struggled for a period due to the pressure of the COVID-19 pandemic. In August 2022, the liquidators made a substantial request for documents and information, some of which the Group’s legal advisors resisted on the basis that 365 had not been the legal advisors client. Requests to ERL were also handled by the Group’s legal advisors, who resisted due to the breadth of the requests and the lack of explanation as to why the documentation requested was reasonably required. 

Eventually, the parties reached an impasse: 

• ERL and the Group’s legal advisors were willing to provide documents in response to focused requests, with justification as to why they were reasonably required.
• The liquidators, however, insisted that ERL and the Group’s legal advisors provide all documentation “relating to” 365’s business.

In light of the deadlock, the liquidators issued an application under sections 235 and 236 IA1986, seeking an order compelling ERL and the Group’s legal advisors to provide all documents relating to 365’s business (“Application”).

Decision at First Instance

ICC Judge Burton dismissed the Application.

The judge held that the evidence adduced by the liquidators had not sufficiently explained why such an extensive and unfocused set of documents was reasonably required. ERL and the Group’s legal advisors had cooperated with targeted requests and resisted only the demand for all documents relating to the business, a request without temporal limits or justification. 

The judge emphasised that the liquidators had to work within the realities of the 365’s circumstances. 365 had never held its own records; they were always maintained by ERL. The Application was found to be “fundamentally misconceived” because it was premised on the liquidators’ view that they should be placed in the position they would have been in had 365 kept its own records, rather than the position the company actually occupied.

Appeal

On appeal before Sir Anthony Mann (sitting as a High Court judge), the liquidators argued that they were entitled to all documents to enable them to reconstitute the company’s knowledge.

In the alternative, they submitted that a request for everything relevant without limitation of time (to which Sir Anthony Mann referred to as an “everything forever” request) without further justification was reasonable where virtually all documents were held by a third party.

The core issue on appeal was the extent to which liquidators must demonstrate a reasonable requirement for documents or information under sections 235 and 236 AIA 1986, and the scope of their entitlement.

Sir Anthony Mann dismissed the appeal. 

It was found that the liquidators must demonstrate a reasonable requirement for the documents sought under both sections 235 and 236 IA 1986.  

In reaching his conclusion, Sir Anthony Mann emphasised that reasonable requirement is a statutory condition. He noted that it would be “anomalous” if this requirement did not apply under section 236 IA 1986, particularly as section 236 IA 1986 applies to third parties and therefore imposes a broader and more demanding burden than section 235 IA 1986. He referred to Re British & Commonwealth Holdings plc v Spicer & Oppenheim [1993] AC 426 and Green v BDO Stoy Hayward LLP [2005] EWHC 2413 in support of this analysis.

The outcome also draws a clear distinction between “purpose” and “requirement”. Whilst it was accepted that reconstituting a company’s knowledge is one potential purpose of sections 235 and 236 IA 1986, it was reiterated that, on its own, this does not amount to a requirement for relief, nor is it a vital element or restriction. Rather, the statutory provisions are the mechanism through which that purpose may be achieved.

Addressing the Appellants’ alternative argument that reconstitution of knowledge was, by itself, a reasonable requirement, Sir Anthony Mann explained that if this were correct, it would apply in every case, reducing the test to a single, universal factor. This was held to be inconsistent with both the authorities and the wording of section 235 IA 1986. 

Key Takeaways

The Eversholt decision offers important guidance for insolvency practitioners on the limits of an officeholder’s powers under sections 235 and 236 IA 1986. Liquidators must demonstrate a reasonable requirement for the documents or information sought. Officeholders must be prepared to justify why each category of document is necessary and why requests are proportionate.