Insolvency Solicitors London and Hertfordshire
The defence of insolvency proceedings or insolvency claims consists of a key area of our legal work.
We do not generally act for Trustees in Bankruptcy or Liquidators, and so no conflict of interest arises in relation to our work.
We typically act for clients in the defence of statutory demands or Insolvency Petitions and also with claims raised by Trustees in bankruptcy and/or by a Liquidator of a Company.
Our lawyers who undertake insolvency work include Partner, Michael Abrahams whose workload also consists of insolvency cases, and Employment Barrister Julian Hunt (who was called to the Bar in 1999). Julian, in particular, was a former Senior Crown Prosecutor and represents our clients in relation to proposed or actual prosecutions containing an insolvency issue. A typical example is the defence of prosecutions for breach of bankruptcy restrictions
The field of insolvency work is very wide ranging and we set out below examples of work which we carry out within this field:
- The defence of the family home following the bankruptcy of an owner or joint owner of the property. We regularly receive instructions concerning this scenario. There are two ways of saving the family home. The first is for the bankruptcy to be annulled or set aside. This is usually on the basis that payment of the debts and expenses of the bankruptcy in full.The second is by acquiring (at an agreed price which is as low as possible) the interest of a Trustee in the property.The cheapest route forward will obviously be pursued.We can introduce our clients to specialist brokers – who are independent of this firm, who can advise and introduce sources of specialist insolvency finance.Insolvency finance is usually bridging finance from specialist lenders of a short-term nature. There is an arrangement fee (typically in the region of £5000), and interest is rolled up over the length of the agreement (typically for six or twelve months). During this period either the monies (and accrued interest) are re-financed at normal commercial rates or the property is sold.
The sale of the property by a Trustee in bankruptcy is usually a financially poor result. The reason for this is as follows: –
(i) A Trustee in bankruptcy would sell the property by way of a forced sale. This is usually based upon a 90-day sale rather than the sale of a property by an owner/occupier and which would extend over a longer period of time if no satisfactory offers are received.
(ii) The net proceeds of the sale will need to be paid into the Bank of England Insolvency Services Account by a Trustee in bankruptcy. This is subject to a deduction of a negative tax of circa 15%. This tax is used to run the Insolvency Service. So accordingly, 15% of the net proceeds of the sale of a property by a trustee in bankruptcy will be lost in tax.
(iii) The relatively high costs of the Trustee in bankruptcy and his Solicitors. We have seen costs relating to possession and sale of the property of a Trustee to be in the region of £40,000 or more and the trustee’s Solicitors costs in excess of £20,000. (it is possible to challenge such costs and expenses in the Court) High fees can be hopefully avoided by annulling the bankruptcy or buying the interest of the Trustee at a relatively early stage. Indeed at the very beginning of the insolvency process, the Official Receiver is the first Trustee in bankruptcy and it is always favourable to try to annul the bankruptcy without the appointment of a private Trustee which would mean that only relatively modest Official Receiver’s costs (general fee of currently £6000) will need to be paid and not a very much higher cost charged by a private Trustee in bankruptcy. We always ask the Official Receiver not to appoint a private trustee where an early application to annul or set aside the bankruptcy order is to be made.
- The defence of claims by insolvency officeholders (a Trustee in bankruptcy or Liquidator) for repayments of monies paid as being in preferences or at an undervalue. These are claims with technical requirements/defences, and typically we use Insolvency Specialist Counsel to assist in the defence of these claims. It is not unusual for claims to be for relatively large sums of money.
- The defence of a claim by a Liquidator for repayment of monies drawn out of the business by a Director. It is necessary with such a claim for a Director to justify each and every drawing in particular whether it is for an agreed salary, lawfully declared dividend, repayment of expenses personally incurred on behalf of the business or to pay creditors.
- We represent clients in relation to proposed income payment agreements/Order applications and other claims made by a Trustee in bankruptcy.
To contact us, please telephone (0208 446 6223) for an initial discussion at no charge. Alternatively, please send an email to email@example.com.
Contact Simons Rodkin Solicitors LLP
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