Insolvency law: area of practice (barristers)
Insolvency cases range massively in scale. At its heart, insolvency law seeks to identify companies and individuals who are unable to pay their debts and then apply a process so as to ensure what limited resources that company or individual has are divided among the interested parties in a principled and fair manner.
When does an insolvency barrister's work start?
A major part of any insolvency barrister’s practice is determining whether a company or individual is in fact insolvent, and if so, what process under the insolvency legislation would achieve the best outcome. Practice involves a healthy balance of advisory and paperwork with regular court appearances, largely in the High Court.
An insolvency barrister’s job, however, is not confined to the application of a handful of statutes. Although the system of insolvency in England and Wales is governed by statute, the field of practice touches upon different facets of the law generally.
Within virtually any insolvency, a barrister will need to consider whether a given creditor’s claim in the insolvency is meritorious. That may involve an analysis of different areas of the law, ranging from the law of contract to professional negligence to matrimonial law. Another common issue is the validity of creditors’ security, or claims to a proprietary interest in the insolvent’s assets.
What other types of disputes do insolvency barristers deal with?
Other types of disputes common to insolvency practice are challenges to an office-holder’s appointment or decisions, and claims to appropriate back into the insolvent estate any assets that were improperly given away or sold at an undervalue on the eve of the insolvency. The asset recovery element of an insolvency may involve tracing through complex offshore trust and company structures.
Particularly within the context of the liquidation of a company, a barrister may need to consider whether there are claims against former directors for fraud or breaches of fiduciary duty. A former director of a company that is in liquidation may face a claim for disqualification.
As a result, an insolvency case might involve only a short one-off advice, or it might (with the larger insolvencies) involve regular hearings and appeals, spanning many years.
Does insolvency law interact with other countries?
Insolvency is inherently international. An English bankrupt might have a holiday home in Portugal. Can an English trustee in bankruptcy obtain possession of that foreign situated property? Is Portugal bound to recognise the title of the trustee?
Insolvency law must be able to deal with the ever diminishing national borders in the modern commercial environment. These issues raise fascinating questions of conflicts of laws.
Is insolvency law recession-proof?
Companies and individuals slip into insolvency irrespective of the general economic climate. Even in the most buoyant of economies, companies fail and individuals overstretch their finances. Insolvency work is often at its most plentiful when the economy is in recession. However, the nature of the work often changes.
What can a pupil expect from a chambers that does insolvency work?
A pupil will be exposed to the work his or her pupil supervisor is undertaking, meaning that the insolvency work that is experienced during pupillage is usually of a high calibre. For example, the insolvency work I saw during pupillage ranged from complex advice in respect of the interaction between third-party insurance legislation and proving in a bankruptcy, to an offshore dispute involving a deceased Ukrainian oligarch. Pupils will typically work 9.00 am to 6.00 pm, and chambers makes an effort to keep to this limit.
During a pupil’s second six, some chambers may offer a pupil the opportunity to undertake his or her own work. Insolvency law, unlike many other areas of practice, offers junior practitioners numerous advocacy opportunities early in their career, whether it be in the winding-up court or a small insolvency matter before a bankruptcy or company registrar.
Types of law practised by insolvency barristers
- Trusts & equity
- Conflict of laws
DONALD LILLY is a barrister at 4 STONE BUILDINGS. He graduated from the University of Oxford with a degree in law in 2004 and was called to the Bar in 2006.