Overview Of Assignment Of Claim By Liquidator
During the course of a Liquidation, assignment of a claim by a Liquidator may be an issue that crops up as part of the winding down of the company.
What Is Assignment Of Claim?
Assignment of claim is the process that is typically processed through a document called a Deed Of Assignment whereby a claim or a cause of action that belonged to a Liquidator or a company that has gone into Liquidation is assigned to another party.
Factors For A Liquidator To Consider On Any Assignment
In order for the issue of the assignment of a claim to be considered by the Liquidator, he or she will usually need to consider:
- Details of the precise causes of action that they are asked to assign.
- Documents that evidence the facts that give rise to those causes of action.
- Terms upon which the Liquidator is asked to agree to the assignment ie. payment of monies in exchange and the timescales for receipt of those funds.
- Legal advice (or use of their own professional judgment) as to the merits of the suggested claims.
- The benefit to creditors from the assignment.
- Whether the Liquidator considers that it is in the best interests of creditors to run the claim(s) instead of granting an assignment.
- How to deal with claims that appear lacking in merit.
Claims Lacking Merit Or Spurious
If the claims proposed to be assigned do not seem meritorious, hopeless or very weak then a Liquidator may well be likely to refuse to grant any assignment.
The risk to a Liquidator who grants an assignment of a spurious claim is that it could give rise to a complaint and the Court may venture its displeasure in any judgment. It is possible, particularly if there is deferred consideration that the Court could actually award adverse costs against the Liquidator personally if he or she assigned a spurious claim that failed.
