Where an Insolvency Practitioner requests a file, then you have to respond; you cannot exercise a lien over the file. You also cannot charge to provide the file. Before sending any file, you should first discuss the matter with the Corporate Counsel. It is often best to call the Insolvency Practitioner and see if you can satisfy their curiosity over the phone. They seldom want the file. Usually, they just want to know if they need to read it to see if it might assist them in finding assets, including whether to challenge your bill and get money back from us.
For corporate insolvencies, the Liquidators or Administrators are office holders. They have the company's power to ask for the company's documents. You have to provide them. In this respect, if you don't, it might be SRA misconduct and they might seek a court order under S 236 of the Insolvency Act 1986 to obtain them. For companies which have entered insolvency proceedings within 12 months of the end of our retainer, note the s235 statutory duty to co-operate (S 235 of the Insolvency Act 1986).
For personal bankruptcies, the position is more nuanced (Ss. 311 and 312 of the Insolvency Act 1986). The Trustee does not control the bankrupt, just has rights to the bankrupt's papers. This engages privilege. In such a case you should ask the client what is to be done with their file. Where matters are personal to the client and the client does not want you to provide the file, then you should contact the General Counsel, you typically will not have to provide the file. Where a matter relates to a personal asset then the Trustee will have a right to the file, but not a right to destroy the client's privilege. Accordingly, when responding to a Trustee's request for documents you should say:
"Although I appreciate ownership of any papers (whether in electronic format or otherwise) we hold on behalf of [bankrupt] will vest in the [Trustee/Joint Trustees], it is likely that some of the contents of the documents will contain material that is subject to legal professional privilege which doesn't vest. So far as I am aware, [bankrupt] has not waived any privilege that may exist in those documents. Please confirm what safeguards and assurances the Trustees can provide that they will not breach any legal professional privilege that may exist in those documents."
This article from the Law Society Gazette and also this article and this article outline some of the technical issues in this area. You should consider involving a colleague with specialist knowledge in this area.
Please also refer to the section on Insolvency of clients