Specialist Insolvency Dispute Law Firm
The insolvency of a company is often the trigger for disputes to occur. Financial claims can be made by Insolvency Practitioners, acting as either liquidators or administrators. They are concerned to collect in the assets of the insolvent company or make claims on its behalf.
A liquidator or administrator will look at all of the company’s books and records and investigate the transactions of the company. It’s first port of call is often to establish whether there are outstanding directors loan accounts. The collection of these loans often represent an opportunity for a liquidation to recover some “low hanging fruit”.
The Insolvency Practitioner (IP) will also consider whether the conduct of the former directors was consistent with their obligations to act in the best interests of the company. Where there is a question mark over the standard of that conduct (and the company has suffered losses) the IP may consider bringing financial claims pursuant to section 212 of the Insolvency Act 1986. In order to succeed under this type of claim the liquidator or administrator would have to show misfeasance on behalf of the director.
Similarly, individual transactions will also be looked at. If in the period prior to insolvency company property was transferred away at less than its market value or certain creditors were paid at the expense of others the Insolvency Practitioner may try to undo those transactions pursuant to section 238 and section 239 of the Insolvency Act 1986, as being transactions at an undervalue and preference payments, respectively.
The IP will also look at other peoples involvement with the company and ask “did any person act in the capacity as a shadow director – a person occupying the position of director, regardless of whether they are officially named as one”.
Finally, the Insolvency Practitioner will report to the Insolvency Service on the conduct of directors/shadow directors to determine whether any person ought to face a period of disqualification. The IP will consider whether the conduct of the former directors potentially “unfit” for the purposes of the Director Disqualification Act 1986
Our experienced insolvency solicitors can help guide you through the process and protect your best interests.
Types of Insolvency Disuptes
The types of claim that a liquidator or administrator may bring include:
- Illegal Dividends
- Wrongful Trading and Fraudulent Trading
- Transactions at Undervalue
- Misfeasance Claims
- Bankruptcy Annulments
- Reuse of company name following insolvency
- Validation Orders