Providing robust solutions to insolvency disputes
Our Insolvency team can provide comprehensive assistance on matters relating to the financial distress of a business. Our experience in a broad array of industries equips us to provide a focused approach to enable us to quickly identify the legal issues that can arise during a voluntary or court-ordered insolvency proceedings.
Insolvency litigation has long been a feature of the dispute resolution landscape in the UK. The most common source of dispute arises between creditors and debtors e.g., disputes over unpaid debts before or during insolvency proceedings and disputes over creditors' security interests, including protective remedies, such as freezing injunctions.
Our specialist Insolvency team can assist you with responding to any claims issued against you by your fellow directors or Insolvency Practitioners. A liquidator or administrator can instigate proceedings in the companys' name for a directors' breach of duty. A company shareholder may also bring a derivative claim on the companys' behalf if the administrator or liquidator does not.
We undertake a comprehensive investigation into your conduct as a director to determine whether you took every step to minimise potential loss to the companys' creditors, as you ought to have taken when the company could not reasonably avoid insolvent liquidation or administration. Those actions could constitute a defence to a wrongful trading action under section 214 of the Insolvency Act. There is no equivalent defence to a fraudulent trading action and therefore we will not leave any stone unturned when helping to defend any insolvency proceedings issued against you.
It is important you understand the financial position of any company you invest in because you may have obligations imposed on you, even as a shareholder. Under Part 23 of the Companies Act, a company can only make a distribution out of the profits available for that purpose. A shareholder who knew or had reasonable grounds to believe at the time the distribution contravened Part 23 is liable to repay it. Even if the dividend is lawful under Part 23, it may nonetheless constitute a transaction at an undervalue or a transaction defrauding creditors.
If insolvency proceedings have been issued against you, contact our team today to learn more about how we can best assist you through this difficult and uncertain time.
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