Once again, the statistics show an increase in corporate and personal insolvencies nationally, with a reported 16,090 corporate insolvencies and 115,299 personal insolvencies in the UK in 2018. While the media is focusing on how this reflects on the economy and the government, insolvency specialist Tony Sampson looks at what it means for the millions of creditors involved in those insolvencies. In short, what will those creditors actually receive?
Fortunately, the payment a creditor may receive out of an insolvency (to offset their outstanding debt), whether it be an individual or a company insolvency, is not limited to simply what the office holder (whether that office holder be a trustee in bankruptcy, liquidator or administrator) can sell available assets for.
There are a whole host of other potential recoveries that the office holder can make, which could swell the pool of available assets in the insolvent estate to release and pay to creditors by way of dividends.
There may have been antecedent transactions before the individual or company went into the insolvency procedure. These could include:
Overturn some or all of the above, and the creditors could be paid in full.
The office holder has wide powers to investigate the affairs of insolvent individuals, companies and directors to make recoveries.
When faced with an insolvency, it is important that creditors do not simply write the debts off and seek to recover their VAT, but rather get themselves appointed on the creditors’ committee and make sure that if there are any recoveries to be made, they are made!
Recoveries to pay creditors in insolvencies are not unknown; you simply need specialist advice from an insolvency lawyer.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.