RNF Bulletin: Creditors, Take Back Control

Creditors can feel powerless when they are left unpaid but they know that there were assets and they can’t see any way of getting hold of them. However it is worth them speaking to an Insolvency Practitioner (IP) because there are a couple of things that can be done.

One of the most common investigations carried out by IPs is looking to see if an asset that should be available to the creditors has been sold prior to insolvency for less than its value, or even given away. This is known formally as a Transaction at Undervalue and is an offence in both corporate and personal insolvency. This can have happened not just with one asset, but with the whole business. Indeed IPs often see businesses being transferred onto NewCo with no money coming back.

If the company or individual that owes the money has gone into formal insolvency then the creditor should liaise with the appointed IP. The information that creditors have about what the company or individual did, what assets there were, what assets have gone astray and what promises were made can be extremely valuable for IPs. At the very least it points IP’s investigations in the right direction and minimises their costs. All the creditors then benefit.

If there is no formal insolvency then the aggrieved creditor should consult an IP. If there is a valuable claim then formal insolvency can be imposed on the company or individual and the appointed IP then has to investigate what happened to the assets.

What can be done?

IPs have the power to apply to Court to get the transaction overturned which, of course brings the asset or its value back into the insolvency for the benefit of the creditors. In practise most claims for Transaction at Undervalue are settled by negotiation rather than by going to Court, which is faster and cheaper. So it always worth a creditor speaking to an IP if they do suspect that assets have gone astray, whether or not there is a formal insolvency process.

Speak to us

At RNF the initial meeting is free and at the end of that meeting the creditor will know what they can do. If you or your clients have any concerns about any situations that you have come across then please call us. We can help you take back control.

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Posted Friday, September 5th, 2014

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