Commencement of insolvency proceedings

If insolvency proceedings have already been started in relation to a business partner, you will need to act swiftly in order to protect your interests and enforce your rights. The law relating to insolvency proceedings varies depending upon the jurisdictions involved. The actions you should consider will depend upon the applicable jurisdiction but may include: 

Confirming insolvency proceedings have started:

  • consider contacting the company
  • a company subject to insolvency proceedings but still trading may voluntarily inform you that insolvency office-holders have been appointed
  • in some jurisdictions, a company subject to insolvency proceedings may by law have to disclose the insolvency office-holders’ appointment in writing
  • if a company is not still trading, it will often notify business partners
  • a search of the company registry in the relevant jurisdiction may tell you whether a company is subject to formal insolvency proceedings
  • the relevant local court, such as the Companies Court in England and Wales, may be able to tell you whether insolvency proceedings have been started
  • there may be websites you can search to see if a winding-up petition has been made
  • your external lawyers may be able to assist

What steps should you consider?

  • generally, if an insolvency practitioner has been appointed, they may be required by law or may voluntarily notify all creditors of whom they are aware of their appointment. Depending on the jurisdiction, if they are compelled to make such a notification by law, there may be a time limit within which they must notify specified parties of their appointment
  • if an insolvency officeholder is appointed but you are not contacted within a notification deadline, as required by the law of the specific jurisdiction, you may want to contact the insolvency officeholder and, in some jurisdictions, submit a written claim for any money owed to you by the company together with evidence of the debt
  • if you have an enforceable retention of title claim (see pre-insolvency considerations), you should consider submitting this to the relevant insolvency officeholder as soon as you become aware of the insolvency proceedings, setting out the basis for your claim and the relevant goods protected
  • if you have any rights of set-off, you should consider writing to the insolvency officeholder as soon as you become aware of the insolvency proceedings and inform them that you intend to enforce your rights

Will you recover your money or goods?

  • if you have a secured charge over the company’s assets, you may receive a significant repayment
  • if you have retained title to your goods (see pre-insolvency considerations), these may be returned to you, where they are identifiable
  • it may take a significant amount of time to recover any money or goods in a complicated insolvency
  • recovery will vary depending on the company and jurisdiction involved