One of the most common concerns for any recipient of ‘the letter’ is that the Insolvency Practitioner is an unknown and, unfortunately, this often casts doubts on their professionalism.
A perception exists that the IP is ‘in the directors’ pocket’ and therefore will not be acting in the best interests of the creditors.
Whilst this is rarely true it is an understandable conclusion to draw.
A call from a firm of solicitors to one of our partners recently raised just such a question.
Notice had been received of a creditors’ meeting in a part of the country where the firm had no coverage.
Initially the solicitors were merely seeking to obtain some comfort by asking whether we had experience of working with the IP involved. We did know the IP in question and so we were able to reassure the solicitors on that count.
We were then asked if we would speak to the IP prior to the meeting as the solicitors’ client was facing not only a very significant (7 figure write-off) but also major operational difficulties as a result of the liquidation.
Over a 24 hour period through a series of emails and phone calls we were able to establish a better understanding the position and to report back to the solicitor.
There were however, still a number of unanswered questions which were causing major business difficulties for the client, and as a result we recommended that we attend the creditors’ meeting on their behalf in order to address the director of the failed company.
So we went to the meeting and as a result were able to get answers to these questions which both helped our client and the IP himself by bringing to light information he was not aware of, and which should enhance the level of realisations in this case.
Additionally we were able to ascertain that a crucial machine part which our client had not been able to get hold of, and which was fundamental to resolving their operational difficulties with a major piece of capital equipment, was within the director’s control.
We reported back to our client, made arrangements for the part in question to be delivered to our client so they could restart their machines, and, in the absence of a creditors’ committee, reached agreement with the IP to meet at 6 weekly intervals for the first 6 months of the liquidation to enable us to keep our client updated.
And all this took place within 72 hours.
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What To Do When Your Customer Goes Bust
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