Insolvency Advice

If you are not an insolvency practitioner then this is the section for you. Why might you be involved in litigation with an insolvency practitioner? The following are all possible causes of action and in no particular order because how could one prioritise when the interests are all different?

Matrimonial homes

Of enormous significance in personal bankruptcy is the issue of the bankrupt’s home, especially if it is jointly owned by a spouse or partner and occupied by a family.

What happens? After bankruptcy at some stage the trustee in bankruptcy will want to claim his share for the creditors. The non-bankrupt spouse will not want to lose it!

Are there arguments which can mitigate the problem?

Yes – and they are many and various. It is these arguments which will often help the bankrupt spouse to keep more than 50% or possibly even defer the sale of a property for many years. However sometimes these arguments are difficult to sustain because of lack of evidence, paperwork no longer in existence, medical evidence not being as clear as one would like and so forth. And if there is a matrimonial breakdown involved life can get even more complicated.

Claims for money owed – book debts

Claims for money can be about practically anything. Such disputes can get inordinately complicated; bundles of papers get bigger and costs rise. Experts get involved and costs rise even further.

Retention of title claims and liens

These are horrendously difficult to prove. The pathway to making a successful claim to retention of title is very rugged indeed. The claimant faces both legal and practical hurdles and success can never be guaranteed. And if it goes wrong, whose fault was it? And yet a good retention of title clause can save a business from bad debts and perhaps its own insolvency.

Claims that an insolvency practitioner’s fees are excessive

For once this is a claim you are making against the IP. You may be a creditor or one of a body of creditors dissatisfied by the IP’s claims or perhaps a bankrupt going for annulment in which case you have a very strong interest in the IP’s fees because you are paying them personally.

An IP has a right to have his fees assessed by the court so from that point of view he has an element of strength. However the courts have issued a lengthy practice direction and one of the provisions is if there is an element of doubt, the court must find against the IP. So that is good for the claimant.

But it is still a very long and tiresome process, can take a long time and cost a lot of money. And there is no certainty that the court will award you costs.

There are just four examples of disputes

All these things can be fought through the court but not without risk.

The problem with claims like these and others is that very often there is no very clear line and as a result litigation carries a big risk – one for both parties in fact. Emotion and stress often accompany the legal process. Such cases are clearly ones where some form of compromise is very often going to be the outcome, probably on the court steps or even part way through a hearing.

Mediation provides an effective method of bringing the issues forward in a forum where they can be tested and evaluated and help the parties to assess their own positions and come to a negotiated settlement where there is something for everyone.

There is nothing like a negotiated agreement to conclude a dispute.

Now read on....