What is insolvency?

Insolvency arises when individuals or businesses are unable to meet their financial obligations. This can often lead to complex legal and financial challenges.

These disputes can involve creditors seeking repayment, debtors attempting to manage or discharge their debts, and various stakeholders navigating the intricacies of insolvency law.

Solicitors play a crucial role in assisting parties involved in insolvency disputes. They provide legal advice, representation, and strategic guidance to resolve conflicts and achieve the best possible outcomes.

ARC Costs have a network of law firms on hand to assist with contentious insolvency disputes. Moreover, we can assist with the recovery and negotiation of insolvency costs upon conclusion of these types of disagreements.

Types of Insolvency

Personal Insolvency:

This affects individuals and can lead to bankruptcy or other debt relief measures.

Bankruptcy:

Bankruptcy is a formal legal procedure for individuals unable to repay their debts. It involves either liquidating assets to pay creditors (under the Insolvency Act 1986) or establishing a repayment plan through an Individual Voluntary Arrangement (IVA). Overseen by the Insolvency Service, bankruptcy provides relief from excessive debt while ensuring fair treatment for creditors.

Individual Voluntary Arrangement (IVA):

An IVA is a legally binding agreement between an individual and their creditors to repay debts over a set period, typically five years. This arrangement helps individuals avoid bankruptcy by making payments that are affordable based on their income and expenses.

Debt Relief Orders (DROs):

DROs are a form of insolvency available to individuals in England, Wales, and Northern Ireland with low income, minimal assets, and debts below a specified threshold. They offer debt relief for those unable to repay their debts and with few assets to liquidate.

Corporate Insolvency:

This affects businesses and can result in liquidation, administration, or restructuring processes.

Corporate Insolvency:

This term refers to a company’s inability to pay its debts. Various formal insolvency procedures are available depending on the circumstances.

Administration:

In this procedure, an insolvency practitioner is appointed to take control of the company. The goal is to rescue the company as a going concern, keeping it operational. The administrator may restructure debts, sell assets, or find a buyer for the business to achieve this.

Liquidation:

This process involves winding up a company’s affairs, typically through a winding-up petition. The company’s assets are sold, and the proceeds are used to repay creditors as much as possible. After all assets are sold, the company is dissolved. There are different types of liquidation, including Creditors Voluntary Liquidation, Members Voluntary Liquidation and Provisional Liquidation.

Insolvency Disputes

Insolvency disputes in England and Wales can arise in various contexts, involving both individuals and companies facing financial difficulties. These disputes can be complex, often requiring legal intervention to resolve issues between debtors, creditors, and insolvency practitioners. Here are some key aspects of insolvency disputes in England and Wales:

Creditor Disputes

Debt recovery:

Creditors or trustees in bankruptcy may seek to recover debts owed by individuals or companies through legal means.

Challenge to liquidation:

Creditors may challenge the appointment of a liquidator or the terms of a liquidation process.

Preference claims:

Disputes can arise if a creditor believes another creditor received preferential treatment before insolvency.

Debtor Disputes

Disputed debts:

Individuals or companies may dispute the validity or amount of a debt claimed by a creditor.

Bankruptcy petitions:

Disputes can occur over the filing and approval of bankruptcy petitions against individuals.

Voluntary arrangements:

Conflicts may arise over the terms or implementation of Individual Voluntary Arrangements (IVAs) or Company Voluntary Arrangements (CVAs).

Insolvency Practitioner Disputes

Misconduct Allegations:

Disputes may involve allegations of misconduct or negligence by insolvency practitioners.

Fee Disputes:

Conflicts can arise over the fees charged by insolvency practitioners.

Challenge to Decisions:

Creditors or debtors may challenge the decisions made by insolvency practitioners in the course of their duties.

Director Disputes

Wrongful Trading:

Company directors may face disputes and legal action if they are accused of wrongful or fraudulent trading, continuing to trade while insolvent.

Breach of Duties:

Disputes can arise if directors are alleged to have breached their fiduciary duties.

Disqualification:

Directors may dispute disqualification orders that prevent them from acting as directors in the future.

What can Insolvency Solicitors assist with?

Insolvency lawyers play a critical role in advising and assisting individuals, businesses, and other stakeholders involved in insolvency proceedings. Their expertise spans various areas to ensure compliance with legal requirements and to protect the interests of their clients.

Debt Advice and Solutions

Assessment of Financial Situation:

Analysing the individual’s financial status and advising on the best course of action.

Negotiating with Creditors:

Engaging with creditors to negotiate repayment plans or settlements.

Insolvency Proceedings

Bankruptcy Petitions:

Assisting with the filing and processing of bankruptcy petitions.

Individual Voluntary Arrangements (IVAs):

Advising on and drafting IVAs to avoid bankruptcy while repaying debts over time.

Debt Relief Orders (DROs):

Assisting eligible individuals in applying for DROs to provide relief from unmanageable debts.

Legal Representation

Court Appearances:

Representing individuals in court proceedings related to insolvency.

Dispute Resolution:

Handling disputes with creditors or insolvency practitioners.

Business Restructuring and Rescue

Company Voluntary Arrangements (CVAs):

Advising on and preparing CVAs to help restructure and save the business.

Administration:

Guiding businesses through the administration process to protect against creditor actions while attempting to restructure or sell the business.

Turnaround Strategies:

Advising on strategies to turn the business around and return to profitability.

Liquidation

Creditors’ Voluntary Liquidation (CVL):

Assisting insolvent companies in voluntarily winding up their affairs.

Members’ Voluntary Liquidation (MVL):

Helping solvent companies wind up in an orderly manner.

Compulsory Liquidation:

Advising on the implications and processes involved in court-ordered liquidation.

Insolvency Practitioner Interaction

Appointment of Practitioners:

Assisting in the appointment of insolvency practitioners to manage the insolvency process.

Oversight and Accountability:

Ensuring that insolvency practitioners act in accordance with their duties and handle the insolvency process properly.

Director Duties and Liabilities

Advice on Duties:

Advising directors on their duties and responsibilities during financial distress.

Défense against Claims:

Representing directors against claims of wrongful trading, misfeasance, or breach of fiduciary duties.

Disqualification Proceedings:

Defending directors in disqualification proceedings.

Debt Recovery

Claims Against Debtors:

Assisting creditors in making claims against insolvent debtors and obtaining Bankruptcy Orders.

Negotiating Settlements:

Engaging with debtors to negotiate settlements or repayment plans.

Insolvency Proceedings

Participating in Meetings:

Representing creditors in meetings with insolvency practitioners and other stakeholders.

Voting on Proposals:

Advising creditors on voting for or against insolvency proposals such as CVAs or IVAs.

Legal Actions

Preference and Transaction at Undervalue Claims:

Assisting creditors in challenging transactions that they believe unfairly benefited other parties before insolvency.

Enforcement Actions:

Taking legal action to enforce debt recovery through court orders or other legal means.

Ensuring Compliance:

Advising clients on compliance with insolvency laws and regulations.

Filing Requirements:

Assisting with the preparation and filing of necessary documents and reports.

Dispute Resolution

Mediation and Arbitration:

Facilitating alternative dispute resolution methods to settle insolvency-related disputes outside of court.

Litigation:

Representing clients in litigation related to insolvency matters.

How can ARC Costs assist?

Obtaining the right legal advice and representation is crucial in insolvency cases. Whilst ARC Costs can assist with the legal costs arising from insolvency litigation, we also maintain a network of specialist solicitors who would be happy to assist in your case.

ARC Costs are highly experienced in advising and assisting with costs issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can assist in your costs issues.

If a costs award has been made, allowing you to recover costs from your opponent, we can assist with preparing a Bill of Costs on your behalf to ensure maximum recoverability. We can also assist in Costs Negotiations and represent you at detailed assessment proceedings. This can determine the amount of costs you may be able to recover.

If you have been ordered to pay costs to your opponent, we can assist in disputing costs which you may deem to be excessive and unreasonable. We can do this by way of preparation of  Points of Dispute and also through negotiations to ensure you will only pay for costs which are reasonably incurred and not exaggerated.

Should you wish to discuss your costs query with us, please call us today on 01204 397302 or via email at info@arccosts.co.uk. Alternatively, you can complete our online query form and we will contact you to discuss your query further. We can provide expert legal advice on costs in our free, no obligation initial consultation.

All of the solicitors from our network are authorised and regulated by the Solicitors Regulation Authority and registered in England and Wales.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.

Follow Us