The UK Court of Appeal recently confirmed that lawyers
(Decherts) could no longer act for a company
(Avonwick). Our views on the first instance
decision can be found
The high court had decided that a bankrupt's right to
privilege does not automatically vest in the trustee in bankruptcy
under the Insolvency Act 1986 (IA). The court
granted an injunction in order to protect Mr Shlosberg (a
bankrupt)'s right to privilege in circumstances where Dechert,
solicitors for both Avonwick and Mr Shlosberg's trustee in
bankruptcy, had reviewed privileged documents as part of ongoing
proceedings involving Avonwick (as claimant) and Mr Shlosberg (as
Avonwick appealed, on the basis that a bankrupt's right to
privilege falls within the definition of 'property' which
automatically vests in a trustee on bankruptcy under the IA; or,
that by necessary implication of those provisions, a trustee is
nevertheless entitled to use a bankrupt's privileged documents
in exercising his statutory functions.
The Court of Appeal dismissed the appeal
It was held that the statutory function of a trustee under the
IA to 'get in, realise and distribute the bankrupt's
estate' does not extend to deploying a bankrupt's
privileged documents in order to assist a third party with
prosecuting its claim
That is the case even though using the privileged material
would reduce the value of a creditor's claim on the
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