Insolvency Litigation

"We have found the KN team to be collaborative, commercial and very pragmatic. We rate the team’s technical expertise as well as their dynamic approach to novel and unusual challenges." A Client, 2020

We have considerable experience in advising on all aspects of insolvency litigation, including acting for insolvency practitioners, companies, individuals and directors.  We are uniquely placed to assist with complex insolvency litigation matters, with particular strength in fraud cases.

In addition to the experience of our commercial litigation team, we can also draw on the expertise of our leading specialists across the firm which means that we are uniquely placed to assist with complex insolvency litigation. We have the benefit of internal specialists in areas including fraud, employment, real estate, regulation, corporate and criminal law to enable us to advise clients on the wide variety of legal issues that can crop up in an insolvency process.

We have particular strength in fraud cases. We are regularly instructed to assist in asset tracing including utilising the full spectrum of insolvency powers available to investigate, locate and preserve assets. We have extensive experience in cross border recovery, asset freezes and search orders and we have the benefit of working with our leading criminal law team and professional advisers in other jurisdictions to assist as necessary.

We can advise on the full range of contentious insolvency matters, including:

  • administrations;
  • bankruptcy;
  • liquidations;
  • provisional liquidations;
  • claims by insolvency practitioners;
  • preferences and transactions at an undervalue;
  • statutory demands and winding-up petitions;
  • advice on Insolvency Act section 234 (delivery up of property), section 235 (duty to co-operate) and section 236 (provision of documents and information);
  • voluntary arrangements (individual and corporate);
  • wrongful trading;
  • fraudulent trading;
  • other fraud and misconduct offences;
  • investor and shareholder disputes;
  • claims against former officers;
  • protection of assets and injunctions; and
  • asset recovery.

Please see the following pages to access the advice you need:

Examples of recent cases

The recent insolvency litigation work we have undertaken includes:

  • acting for insolvency practitioners in obtaining multiple urgent out of court administration appointments including advising on their powers and post appointment issues including ROT claims, purported exercise of liens, cross border elements, furloughing/redundancy of staff and termination of leases;
  • advising office holders and directors on their powers and obligations under section 234 (delivery up of property), section 235 (duty to co-operate) and section 236 (provision of documents and information) of the Insolvency Act 1986;
  • advising creditors in proving their claims in both administrations and liquidations including successfully challenging the joint liquidators’ failure to adjudicate in a timely fashion and negotiating payment in full plus interest;
  • advising office holders, creditors and shareholders on their rights and powers to bring claims against delinquent directors including antecedent transactions (particularly, risk of wrongful trading and fraudulent trading claims);
  • acting for the liquidator of a Cayman company in relation to a pension scheme being investigated by the Serious Fraud Office;
  • advising companies on statutory demands and obtaining injunctive relief in relation to the presentation of winding-up petitions;
  • negotiating the discontinuation of directors’ disqualification proceedings against our client, including payment of a significant proportion of his costs;
  • acting for a trustee in bankruptcy seeking to challenge various transactions, including a divorce settlement, and to challenge an employee benefit trust on the basis that it was a sham;
  • acting for a liquidator seeking to recover fees paid to the former administrators on the basis that they were excessive for the amount of work done and raised in breach of the fiduciary duties owed by the former administrators.
  • acting for a liquidator to recovery early termination charges mistakenly paid under a factoring agreement;
  • acting for a company challenging a third party debt order and a charging order obtained by trustees in bankruptcy on the basis that the ‘loan’ the orders are based on was in fact a settlement into a trust;
  • acting for a director whose company had been placed into Provisional Liquidation following the service by HMRC of Notice of Assessments in excess of £7million. HMRC issued a winding up petition against the company and the Provisional Liquidator issued misfeasance proceedings against the director. We represented the company in opposing the winding up petition which was listed for a 10 day hearing. The matter was heavily contested and was settled just before the hearing.

 

For more information, have a look at our frequently asked questions on insolvency litigation and read our case studies.

We can give advice and discuss the various options available for funding insolvency litigation which may include acting on a Conditional Fee Agreement or obtaining litigation funding from a third party funder.

 

 

approachable litigators who are efficient and organised. They take the time to know the case and to know the client."

Chambers and Partners, 2019

sensible, realistic view of cases - seizing only the points worth arguing..."

Chambers UK, A Client's Guide to the Legal Profession

Latest blogs & news

Bankrupt beneficiaries and risks for personal representatives

While testators generally have freedom to decide how to dispose of their assets in England and Wales, there are limits to this freedom, including where a beneficiary of the estate is made bankrupt. If the testator passes away during the course of the beneficiary’s bankruptcy, the legacy will usually pass to the trustee in bankruptcy for the benefit of creditors instead of to the beneficiary.

Rising from the ashes

The government has introduced two separate pieces of legislation aimed at redressing the abuse of “killing off” companies to escape liabilities. One recently came into force, the other is currently before parliament.

A nervous disposition

Daniel Staunton explores the inherent conflict between the jurisdiction of the bankruptcy courts and the family courts and asks which jurisdiction trumps the other? This article focuses on the authorities in relation to section 284 and when family court orders might be liable to be set aside as void dispositions

On the rebound: How to clawback from a divorce

Mary Young explores how divorce settlements between spouses may be caught later down the line in bankruptcy proceedings as potential TUVs where there are dishonest motives.

Convergent Divergence: When bankruptcy and the family courts collide

What often happens when the insolvency courts and family courts collide; the potential effect a bankruptcy order of one spouse can have on a financial order made in favour of the non-bankrupt spouse and the different tests of each court.

One hand in the cookie jar: Fraud and directors’ duties in insolvency

What happens when a director commits fraud by misappropriating company assets?  Or what of the director who continues trading knowing that the company has no realistic prospect of paying its debts as and when they fall due? To whom does a director owe duties at that point and what recourse is there against that director? This article explores these questions.

£26 billion fraud: The other side of the Coronavirus Business Interruption Loan Schemes

We have previously examined how the Government’s Coronavirus Business Interruption Loan Schemes (the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS)(together the “Schemes”) work. A report issued by the Public Accounts Committee on 10 December 2020 highlights the darker side of the Schemes and what it is costing the UK taxpayer. 

The Queen’s Gambit: Crown Preference

This article will focus on Her Majesty’s Revenue and Custom’s (HMRC’s) “gambit” to gain an advantage over other creditors through the return of the “crown preference” from 1 December 2020. This article explores what HMRC’s status as a secondary preferential creditor means and its implications for insolvency practitioners and others going forward.

Civil Fraud Quarterly Round-Up: Q4 2020

A Civil Fraud quarterly round-up (4th quarter 2020)

Money, money, money: what are directors’ duties in respect of the company’s bank account?

Disputes between directors often arise because of, and/or result in, disputes about company money. Directors need to be alert to how they are required to act, particularly in times of conflict.

Insolvency Practitioners: the regulator’s reach is wide when it comes to integrity

It goes without saying that Insolvency Practitioners must behave honestly and with integrity in all their professional dealings.  IPs must handle money and assets in a way which justifies the trust placed in them, but some professionals don’t realise that the way they behave on a Saturday night may be just as relevant to their ability to continue in their chosen profession as the way they behave on a Monday morning.   

Fraud and opportunism during COVID-19

The current global pandemic has provided and will continue to provide plentiful opportunities for fraud and opportunism.

Insolvency and furlough fraud – directors beware!

There has been much mention in the press in recent times about the amount of allegedly incorrect or fraudulent claims made by employers under the Government’s Coronavirus Job Retention Scheme (“CJRS”) (furlough scheme).

Think twice: might the estate be insolvent?

This blog focuses on two practical considerations that should be borne in mind when dealing with an estate where there are any suspicions that the value of the assets when realised may be insufficient to meet all debts and liabilities in full.

Disclosure of documents subject to implied undertakings

The recent case of The Official Receiver v Andrew Nathaniel Skeene and Junie Conrad Omari Bowers [2020] EWHC 1252 (Ch) (“Skeene”) is a good example of the crossover between insolvency related proceedings and criminal proceedings. In this case, the High Court considered the Official Receiver’s (“OR”) ability to disclose to the Serious Fraud Office (“SFO”) documents which had been obtained by the OR during the course of disqualification proceedings. 

Insolvency interviews in the context of suspected criminal or regulatory misconduct

Interviews are frequently conducted by office-holders with individuals previously involved with an insolvent company, such as directors and officers, employees, accountants, lawyers and other third parties. Such interviews will often provide key information regarding the company’s trading and dealings and the actions of its directors and employees, thereby assisting office-holders seeking to investigate potential fraud, misfeasance and other forms of misconduct.

Insolvency powers: Section 236 and extra territorial effect

Third parties are often caught (innocently or not) in the cross hairs of office holders seeking information and/or documents on the asset and liability position of a company in order to fulfil their functions properly and their duties to the creditors.

Civil Fraud Quarterly Round-Up: Q2 2020

A Civil Fraud quarterly round-up (2nd quarter 2020)

The emperor’s new clothes or sweeping reform? The Corporate Insolvency and Governance Bill

The Corporate Insolvency and Governance Bill received its first reading in the House of Commons on 20 May 2020, several months after Alok Sharma first announced what we expected to be the biggest changes to insolvency law in decades.

Fraud Unravels All?

In the recent case of Georgallides –v- Secretary of State for Business, Energy and Industrial Strategy [2020] EWHC 768 (Ch), the High Court grappled with the question of how the maxim “fraud unravels all” should apply to disqualification undertakings given pursuant to Section 8A of the Company Directors Disqualification Act 1986 (“the CDDA”).

Insolvency Litigation Case Studies

Insolvency Litigation Case Studies

Challenge to divorce

Sham trusts

Trust or loan?

Challenge to former administrators’ fees

Director’s disqualification

Challenge to statutory demand

Freezing assets

Liquidators’ failure to adjudicate

Section 236 interviews and document requests

Out of court administration (no qualifying floating chargeholder)

Out of court administration (with qualifying floating chargeholder)

Related pages

Insolvency Litigation FAQs

This page sets out a number of Frequently Asked Questions in relation to Insolvency Litigation.

Insolvency Litigation advice for Insolvency Practitioners

We regularly act for trustees in bankruptcy, liquidators and administrators. Our in-depth civil fraud expertise means that we are particularly well placed to assist in complex insolvency disputes that involve an element of fraud and/or dishonesty.

Insolvency Litigation advice for Individuals

We can assist creditors of insolvent companies and people who have claims against insolvent companies. We can also assist victims of fraud with claims against an insolvent company or individual.

Insolvency Litigation advice for Companies

We can advise companies facing statutory demands and winding-up petitions. We regularly act for companies who need advice in challenging a statutory demand and obtaining injunctive relief to prevent the presentation of a winding-up petition where necessary.

Insolvency Litigation advice for Directors

We have experience of advising directors facing claims of fraudulent trading or wrongful trading, and we can also advise directors on the extent of their duties to co-operate with the insolvency practitioner, including at interview.

Civil Fraud and Investigations

The international nature of commerce and growing reliance on electronic communications mean that the number and value of fraud claims is rising.

Commercial and Contract Disputes

Corporate disputes can be stressful, disruptive and damaging. We provide tactical and strategic advice to businesses and individuals.

Dispute Resolution

Dealing with a dispute professionally and commercially takes skill. We assist and support our clients with both legal knowledge and strategy.

Financial Services Disputes

We represent individuals and businesses in high value and complex claims against banks and financial institutions.

Injunctions

If you need to prevent the loss of an asset, damage to reputation, or protect against personal harm, it may be necessary to apply for an injunction.

International and Cross-Border Disputes

When disputes involve individuals or organisations in different countries, those involved often face an array of complex issues in various jurisdictions.

Litigation Funding Options

Funding litigation can be expensive and cause concern. We hope to alleviate these concerns by offering our clients a bespoke funding package.

Professional Negligence

Our experienced team of litigators act for claimants in bringing claims against professionals when they get it wrong.

Reputation and Media

Protecting our clients’ reputation and maintaining control when they are the subject of media scrutiny is what we do.

Shareholder and Boardroom Disputes

When individuals fall out in business it can have devastating consequences. Our litigation team has extensive experience in resolving disputes.

News and blogs

View all

Blogs

On the rebound: How to clawback from a divorce

Convergent Divergence: When bankruptcy and the family courts collide

One hand in the cookie jar: Fraud and directors’ duties in insolvency

£26 billion fraud: The other side of the Coronavirus Business Interruption Loan Schemes

The Queen’s Gambit: Crown Preference

Civil Fraud Quarterly Round-Up: Q4 2020

Money, money, money: what are directors’ duties in respect of the company’s bank account?

Insolvency Practitioners: the regulator’s reach is wide when it comes to integrity

Fraud and opportunism during COVID-19

Insolvency and furlough fraud – directors beware!

Think twice: might the estate be insolvent?

Insolvency interviews in the context of suspected criminal or regulatory misconduct

Insolvency powers: Section 236 and extra territorial effect

Civil Fraud Quarterly Round-Up: Q2 2020

Back to the drawing board: Do I have to re-plead/re-prove my case?

The emperor’s new clothes or sweeping reform? The Corporate Insolvency and Governance Bill

Fraud Unravels All?

Civil Fraud Quarterly Round-Up: Q1 2020

Liquidation and Fiduciary Duties: No Rest for (the Wicked?) Directors

US and UK cybersecurity agencies publish a joint statement warning of a rise in Covid-related cybercrime

Insolvency Service investigations into trading companies

The Maserati Fraud

Alok Sharma shakes up insolvency laws

It’s only a court order, who cares? –Contempt of court

SAAMCO reinforced: Clients may bear the weight of their own commercial misjudgements

Directors of a solvent company are under no duty to prioritise the interests of potential creditors when entering transactions, even where there is a recognised risk of insolvency

Legal update: Claimant’s delay proves fatal when making application for relief from sanctions

Corporate fraud – what is it and how should it be dealt with?

High Court examines the interrelationship between Inheritance Act and the Insolvency Act

How can I challenge a freezing order over my assets?

Expert shopping is not for the privileged

Alternative Dispute Resolution (ADR) up for discussion

Case update: Court of Appeal criticises judge for refusing to recuse himself

Fraud Advisory Panel’s report published today: obtaining redress and improving outcomes for fraud victims

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