If you are a creditor of an insolvent company or a bankruptcy, Oliver Elliot can help you address your concerns arising from the insolvency and explain Insolvency Practitioner Duty To Creditors.
What is an Insolvency Practitioner’s Duty To Creditors?
Many creditors are surprised that they receive little or nothing from the insolvency process when an individual goes bankrupt, into an Individual Voluntary Arrangement (“IVA”) or a company goes into Liquidation.
How many creditors have asked themselves the question as to what they did to engage in the process? More often than not creditors leave matters to the Insolvency Practitioner (“IP”) and perhaps might hope for the best.
Whilst many creditors maybe unfamiliar with the process there is a great deal of information that they are given by the appointed Insolvency Practitioner and there is more online to review.
The relationship between an IP and creditors is not contractual and an IP’s duty is to the general body of creditors, not to each one individually.
Creditors must remember that it is their money that is at stake. Unfortunately when misconduct is found and litigation is required to set aside transactions entered into to defeat creditors, the requirement for funding can result in creditors becoming disillusioned with the process. However, it is worth remembering that an IP is not obliged to place themselves personally at risk for the purposes of enabling litigation to proceed.
An IP enters his role as a stranger, so unless creditors do engage and participate in the process to bring matters to the insolvency practitioner’s attention if there has been some misconduct by a debtor or a director, it is perfectly possible that the IP may not become aware of the same.
It would therefore generally assist if as many creditors as possible engage in the process and if you do not get the results that you are looking for then you can with the support of a majority of creditors remove and replace an Insolvency Practitioner if necessary.
Creditors are ultimately in control of the process and an Insolvency Practitioner is a servant of the creditors, not a slave.
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Disclaimer: Insolvency Practitioner Duty To Creditors
This page: Insolvency Practitioner Duty To Creditors is not legal advice and not to be relied upon as such. If in doubt you should take independent professional advice on the facts of your case. This guide is just a guide, for information purposes only. No liability is accepted for any reliance placed upon it.