Insolvency law

Insolvency law encompasses two distinct areas: corporate and personal insolvency. Both require advice to clients and litigation, either for or against the insolvent individual or company.

An insolvency barrister's work

Practising insolvency law calls for a good understanding of related areas of law that frequently arise in conjunction with ‘pure’ insolvency issues, such as contract law, company law, mortgages and other securities, the conflict of laws and principles of trusts and equity.

'Pupils are involved in producing their own opinions and skeleton arguments for hearings.'

Barristers in this area also need to develop a thorough knowledge of the statutory framework governing insolvency law (in particular the Insolvency Acts 1986 and 2000, associated legislation such as the Companies Act 1985 and the Directors’ Disqualification Act 1986, the EC Regulation on Insolvency Proceedings 2000 and more recent amending legislation, such as the Enterprise Act 2002). In addition, sound commercial sense and an ability to get to grips with accounts and business are invaluable.

There are frequently changes in the substantive law and it is necessary to keep abreast of these. Relatively recent examples include the Insolvency Act 2000 and Enterprise Act 2002; the House of Lords decisions in Spectrum Plus Ltd v. National Westminster Bank plc, which restated the law governing fixed and floating charges over book debts; and the EC Regulation on Insolvency Proceedings 2000, which has direct effect in the UK and governs both corporate and personal insolvencies where the insolvent party has interests that extend into more than one member state of the EU.

Pupillages in Insolvency law

In the early years of practice junior barristers appear frequently in the winding up court, which sits on a Wednesday morning in the Royal Courts of Justice in the Strand and deals with the compulsory liquidation of companies that may be insolvent, before registrars and district judges in bankruptcy hearings, and in hearings where trustees will seek court orders for the sale of assets in order to realise funds to distribute among a bankrupt’s creditors.

One of the key attractions of this area is that as a barrister you are responsible for interesting and frequently challenging cases that impact directly upon the livelihoods and businesses of the parties involved. This can also be testing, particularly in bankruptcies where a family home may have to be sold: what you do can have significant and serious results for people whose lives and finances may already be in a bad state.

Is insolvency law recession-proof?

There is always a lot of insolvency and corporate reconstruction work, but, as you may expect, during a downturn insolvency picks up considerably. The figures speak for themselves: in 2009 as many as 19,077 companies were liquidated, representing an increase of 22.8 per cent from 2008 (which was itself a bad year). There were 134,142 individual insolvencies in 2009, representing an increase on the previous year of 25.9 per cent.

What skills do insolvency law barristers need?

• Strong powers of analysis.
• A practical, commercial mindset.
• Confidence in court needs to be developed quickly as there is a lot of litigation.

Insolvency law pupillages

Pupils are involved in producing their own opinions and skeleton arguments for hearings. They attend conferences with their pupil supervisor on matters that can range from simple bankruptcies or liquidations to huge and complex international insolvencies such as those connected with Northern Rock, Lehman Brothers or the Madoff scandal. A second six pupil may be given a brief to attend the winding up court or a hearing of a simple bankruptcy petition.

Types of law practised

• Company law.
• Conflict of laws.
• Contract law.
• Insolvency law.
• Partnership law.
• Pensions law.

Edward Cumming is a barrister at XXIV Old Buildings. He studied law at Cambridge and then completed a masters degree at the University of Pennsylvania. He was a director of an engineering and property management company prior to joining XX1V Old Buildings and has a broad chancery and commercial practice with particular focus on business restructuring and insolvency.