Personal Insolvency

When you incur a bad debt, having the right strategy for recovery is paramount. The extensive powers afforded to a Trustee in Bankruptcy enable robust investigations, resulting in maximised asset recovery. Creditors understandably become frustrated when a debtor attempts to resist payment. This may be due to a genuine dispute or a ploy to hide or dissipate assets. If the latter is a genuine concern, then as part of the overall strategy the appointment of an Interim Receiver may be a valid consideration in order to protect and manage a debtor’s estate after a bankruptcy petition has been presented but the hearing date for the Order is sometime in the future. The IR appointment ensures assets are preserved and creditors’ interests safeguarded in the post-petition period. 

An IVA is a legally binding agreement that enables the realisation of a debtor’s assets on a consensual basis.

There is no set duration – every proposal is bespoke depending on the debtor’s asset position. Creditors vote on the proposal and if more than 75% of those voting approve the proposal then all unsecured creditors are bound by it. If an IVA is the right option for all stakeholders, we can assist in preparing a proposal that is sensible, realistic and offers tangible advantages over Bankruptcy.

This can often be a difficult balancing act but is one we are well versed in advising on. We know what will and will not work.

Although often considered the last-resort option, Bankruptcy can open many doors to maximise recoveries. A Trustee in Bankruptcy steps into the shoes of the debtor and has extensive powers to recover documents and property located in the UK and abroad. Costs of investigation and recovery are agreed by creditors and payable from assets realised in the estate. Bankruptcy compels the debtor’s cooperation and can facilitate the recovery of assets that have been transferred or hidden. A Trustee has access to different forms of funding if litigation is necessary. 

If you are a creditor or executor of a deceased estate that may be insolvent, an Insolvency Administration Order (IAO) may be the best option to administer the estate safely and effectively.

It provides a structured and legally recognised method for handling the debts of a person who has died insolvent. By placing the estate under the jurisdiction of the insolvency court, it ensures the estate is administered fairly and in accordance with insolvency legislation and provides the mechanism to reverse certain transactions, such as the usual rules of survivorship, to recover property and discharge liabilities to creditors.

It also avoids the potential of personal liability for the Executor/Personal Representative.