Experience in dealing with Insolvency Practitioners
It is vital to understand some fundamentals about the whole insolvency process as early as possible when you are a creditor.
Perhaps most important of all :-
- Insolvency Practitioners, whilst having legal duties, will approach the matter on the basis that they get paid for their time. If there are very limited assets available, don’t expect the IP to go the extra mile on behalf of creditors.
- An Insolvency Practitioner has legal duties to creditors, but those duties are fairly loosely defined, so the Practitioner has significant leeway to decide how best to act. Expect the IP to adopt a commercial approach.
- If you want the Insolvency Practitioner to take certain steps which may assist in recovery or in proving wrongdoing by directors, as an example, you need to have a strategy and this may involve discussions with other creditors.
In short, as a creditor in an insolvency or administration scenario, if you have reason to believe that your chances of recovering more money will be improved by convincing an IP to take certain actions, you need to know what you are doing, and generally to act quickly. Examples of where we might be able to assist include:-
- advice and assistance with trying to get an Insolvency Practitioner of your choice appointed, rather than one chosen by other creditors or the Official Receiver on a liquidation.
- investigating whether there is any evidence of unlawful trading, preferences or company law breaches, such as involving directors loans as early as possible. This may encourage the Insolvency Practitioner to pursue those matters if creditors have done some of the groundwork. The same principle applies as regards possible debts owed to the insolvent entity, which the IP may or may not consider are worth pursuing.
- advice on whether to consider acting in concert with other creditors – the insolvent business may be owed money, possibly a lot of money, but the IP may decide that there are insufficient prospects of recovery or that he or she does not have funds to pursue the issue via litigation. If creditors or some of them act together, and possibly even funding action by the IP, this may make a difference.
- obtaining updates and information from the IP. Whilst there are certain formalities the Practitioner must comply with, these are fairly minimal and do not require regular information or updates to be provided. If you want more potential influence and to be kept more informed by an IP, this needs to be carefully done. many creditors are extremely frustrated and angry, rightly and understandably so. Frustration can spill over into being overly pushy with the Insolvency Practitioner. If you get his or her back up, they may be less amenable to co-operating with you any more than they have to. I have significant experience in dealing with Insolvency Practitioners so can assist in this respect.
The above are just a few of the ways I can assist you as a creditor if you believe it may make a difference if you take an active role in the insolvency of a debtor. You may also feel so strongly that you want to pursue issues such as possible director misfeasance as a matter of principle.
First and foremost, I always recommend that creditor clients remain very aware of the risk of throwing good money after bad, so it’s essential to consider your position, whether as a secured or unsecured creditor and whether investing time and money may possibly increase your prospects of recovering more of your money.
If I can offer you further advice on insolvency please get in touch on 0207 242 8966 or email me at ku.oc1579452150.gnir1579452150abej@1579452150moolb1579452150yelda1579452150rb1579452150