Select Page

 

 

 

 

 

 

 

 

 

 

Insolvency and Asset Recovery: Alternative Funding Options

Insolvency and Asset Recovery: Alternative Funding Options

insolvency and asset recovery

Jump straight to “Funding and insurance options for insolvency and asset recovery cases”

Insolvency and asset recovery are critical components of the financial and legal landscapes, addressing the complications that arise when individuals or businesses are unable to meet their financial obligations.

The insolvency process involves legal procedures designed to manage and resolve these financial difficulties, often resulting in the restructuring or liquidation of the debtor’s assets. Understanding these processes is essential for company directors, creditors, and stakeholders to navigate financial challenges effectively.

Annecto Legal helps insolvency practitioners and distressed businesses in finding the right litigation support, funding and insurance for their insolvency cases and asset recovery. Moreover, we help insolvency recovery teams to secure the best result for creditors in insolvency litigation.

The insolvency process

The insolvency process in England and Wales is governed by the Insolvency Act 1986. This Act sets out insolvency procedures, including administration, liquidation, receivership and company voluntary arrangements (CVAs).

 

Administration:

Administration is a rescue mechanism aiming to reorganise a company or realise its assets more advantageously than liquidation. An administrator is appointed to manage the company’s affairs, business, and property.

 

Liquidation:

The liquidation process involves winding up a company’s affairs, selling its assets, and distributing the proceeds to creditors. Liquidation can be compulsory (court-ordered) or voluntary.

 

Receivership:

Unlike administration, receivership is initiated by the company’s creditors rather than the company itself. A receiver is appointed by the court with the primary objective of recovering as much money as possible to settle creditors’ claims. In receivership, the interests of the creditors are prioritised over the company’s survival.

 

Company Voluntary Arrangement (CVA):

A CVA allows a company to reach an agreement with its creditors to pay off its debts over time. It requires approval from creditors holding at least 75% of the company’s debt.

Asset recovery in insolvency

Asset recovery in insolvency is the process of identifying, locating, and reclaiming assets that belong to an insolvent debtor but have been concealed, misappropriated, or transferred improperly. The primary goal of asset recovery in this context is to maximise the returns to creditors by ensuring that all available assets are brought into the insolvency estate and distributed according to the legal framework governing insolvency proceedings.

This involves a thorough investigation to determine the full extent of the debtor’s assets. Assets can be tangible, like real estate and machinery, or intangible, such as intellectual property and receivables.

In cases where assets have been transferred to third parties, often through fraudulent transactions, the process of asset tracing is crucial. This can involve following complex trails of transactions to locate assets that have been hidden or moved to evade creditors.

Recovering assets frequently requires legal action to undo fraudulent transfers or to compel third parties to return assets to the insolvent estate.

Funding and insurance options for insolvency and asset recovery cases

When pursuing insolvency litigation, legal costs can escalate quickly. Therefore, it is essential that parties are aware of the funding options that are available to them. Listed below are some of the cost-effective options for funding insolvency litigation:

Assignment

Some types of disputes can be assigned to a third party, usually for an upfront payment and a share of recoveries (after costs). This model can be useful on smaller cases when the ATE and CFA model would not deliver value. But giving up control can sometimes be costly, especially on larger disputes. When assigning a claim, it is important to understand the pros and cons, and to show the process followed to maximise value. Working with a broker can be an effective way to do this and provide your file with a written record of the process undertaken.

After the event insurance 

After the event (ATE) insurance is a type of insurance that can provide cover for legal costs in the event that a case is unsuccessful. This option can be particularly useful in cases where the outcome is uncertain, and the costs of losing a case could be significant. ATE insurance is often used with conditional fee agreements and contingency fee agreements. ATE can also be used to meet Security for Costs applications, sometimes sitting alongside a Deed or Indemnity. There are many providers of ATE insurance and it can be useful to have a broker secure the best deal and explain the different options.

Third party litigation funding

In some cases, third party litigation funders may be willing to provide funding for an insolvency dispute claim in exchange for a share of any financial settlement or damages awarded. This option can be attractive when there are no funds to pay for legal fees, but the case is strong and there’s a good chance of making a recovery. There are many different forms of non-recourse third party litigation funding, ranging from disbursement funding up to full funding for all legal costs and an IP’s WIP. Annecto Legal is well placed to explain the different options and what could be available on any particular case.

Why choose Annecto Legal?

At Annecto Legal, we have experience in advising and assisting on high profile insolvency and asset recovery matters. We help a wide range of clients in finding the appropriate funding, assignment options and law firms for insolvency cases and to help them recover assets. We can also provide assistance in cross border insolvency matters and offshore jurisdictions.

Annecto Legal regularly assists market leading insolvency practitioners and liquidators who are involved in advising companies in administration and liquidation. If you are in the process of pursuing or defending an insolvency claim and want to find out whether we can assist in helping you fulfil your obligations and secure the right deal, then contact Annecto Legal now.

Get in touch

* Annecto Legal can only assist on case where the loss is in excess of £100,000, with the exception of data breach claims. If you need assistance on a claim worth over £100,000, please get in touch using our form or the details below:

Registered Office

Annecto Legal Ltd, 106 Kennedy Building, Murray Street, Manchester , M4 6HS

Phone

0800 612 6587

Email

info@annectolegal.co.uk

Contact us directly 

Value