Bankruptcy proceedings

When a court declares a company bankrupt, the business does not simply stop; it changes hands. From that day the directors no longer decide what happens to the assets, a trustee does, and the questions that follow arrive quickly and from every side. Suppliers want their goods back, the bank calls on guarantees, employees ask who will pay them, and the directors are asked to explain the books. Decisions taken in the first weeks, or left untaken, tend to fix positions for the rest of the proceedings.

Bankruptcy proceedings are litigation in their own right, with a court, a trustee and many parties whose interests rarely align. Whether you are a director of the company, one of its creditors or someone who did business with it, the proceedings turn on a set of questions on which you will have to take a position:

• the rules on challenging a bankruptcy order, on who may do so and on what grounds;
• the rules on the company’s loss of control over its assets, and on what it may still do once the order is made;
• the rules on the inventory and sale of the assets, and on how the price obtained is checked;
• the rules on the director’s duty to cooperate — handing over books and records, providing information and appearing when summoned;
• the rules on reclaiming goods held by the bankrupt company, including goods delivered under retention of title;
• the rules on set-off, and on whether a debt owed to the bankrupt company can still be offset against a claim on it;
• the rules on lawsuits pending when the order is made, and on who continues them for or against the estate;
• the rules on personal guarantees given by directors or shareholders, and on when a creditor may call on them.

Our lawyers can support you with this.