Insolvency law: area of practice (barristers)
The essence of our insolvency legislation (the Insolvency Act 1986 and the Insolvency Rules 2016) is the regulation of the process whereby the assets of an insolvent individual (bankruptcy) or company (liquidation) are realised and distributed equally among creditors. There are other important processes covered by the 1986 Act, such as administrations (companies) and voluntary arrangements (companies and individuals). These are aimed at rescue, restructuring or getting a better result for creditors than a liquidation or bankruptcy. In all cases, the estate is administered by a licensed insolvency practitioner (IP).
Insolvency litigation can involve acting for debtors, creditors, the IP, a bank, a landlord or other creditor, or you could be working for the defendant, who might be the debtor, a director or the beneficiary of a transaction at undervalue. Equally, you could be representing a third party – for example a creditor who has made a claim against the assets of the insolvent estate.
Litigation work may cover the entire process – from petitioning the court for a bankruptcy or winding-up order, or defending such a petition, through to assisting the IP with the processes of investigation, recovering assets and litigating for the recovery of assets or damages for trading while insolvent. It can also cover misfeasance and breach of trust on the part of directors or defending those claims.
What do insolvency barristers do?
Insolvency litigation often falls within two categories.
First, is what I call the ‘hit and run’ case. This tends to involve a single hearing or two to four hearings over a short period. Examples include applications for an administration order (typically a 45-minute hearing), contested winding-up or bankruptcy petitions, applications for private examinations and possession claims.
Second is what I call ‘classic’ contentious insolvency litigation, for example claims against directors for wrongful trading or claims against the recipient of a transaction at an undervalue or fraud claims. These culminate in full trials, with witnesses, and can take from one to two years to reach trial. A barrister will attend at least four or five directions hearings (dealing with disclosure and expert evidence) and then the trial, which can last anywhere from a day to many months.
There is also non-contentious work, which requires a court hearing – such as claims to determine priority rights or the status of securities or a point of construction.
A newly qualified junior will probably be in court two or three times per week on small matters such as winding-up petitions, bankruptcy petitions and directions hearings.
Cases are generally heard in the Business and Property Courts of the High Court or at the district registries or, in the case of bankruptcy, the debtor’s local court. Other jurisdictions are targeted by the specialist sets and there is a fair amount of offshore work, for example in the Cayman Islands.
What is life like at the insolvency Bar?
Life at the Bar is neither predictable nor boring. Your work hard and there will be ‘all-nighters’, weekends in chambers and cancelled arrangements. But you are your own boss and can control your work/life balance in a way that junior solicitors almost certainly can’t.
It can be stressful but, at least at the commercial Bar, we’re usually very well paid. That said, insolvency is probably not as well remunerated as other areas of chancery/commercial work.
How will Brexit affect insolvency barristers’ work?
When the EU Regulation on Insolvency Proceedings stops being part of our domestic law, there won’t be automatic recognition of English bankruptcies, liquidations and other insolvency processes across the EEA. This will mean that new litigation will be required for each cross-border case.
What will you do in insolvency law as a pupil barrister?
A pupil’s working day is 8.30/9.00 am to 6.00/6.30 pm. Pupils should not have to work any longer (or at weekends) without good reason. However, if your supervisor gives you a deadline, you must do your utmost to meet it, even if that means staying late, working at the weekend or cancelling arrangements. Effective time management is an essential skill at the Bar.
Pupils will do research, draft pleadings, skeleton arguments and witness statements. Some chambers will send pupils to court on small matters in their second six. The second six is usually more intense; pupils will invariably be doing work for more than one member of chambers as well as (sometimes) taking on their own cases.
Types of law practised as an insolvency barrister
There are what I call ‘pure’ insolvency matters, such as the interpretation of the legislation, but just as often, there is cross-over with countless other areas such as tax, property, trusts and landlord and tenant law.
MARCIA SHEKERDEMIAN QC is a barrister at WILBERFORCE CHAMBERS. She read law at the University of Cambridge, graduating in 1986, and was called to the Bar in 1987. She took silk in 2015.
Skills and attributes sought in insolvency barristers
- Networking skills – the insolvency community is small and social. Meeting with IPs and solicitors at conferences or over drinks is essential.
- A head for law – applications often involve points of law for argument, rather than evidence or disputes of fact.