Bully Your IP!
IPs act for everyone in an insolvency process, which means that they can appear to be answerable to no-one. However there are ways of making your wishes felt and ensuring that the IP pursues all sensible options.
In the recent case of Hockin v Marsden, a company had a potential mis-selling claim against its Bank relating to interest rate swaps. The company went into Administration and the Administrators had concluded that it was not cost-effective or easy for the company, acting via the Administrators, to bring the claim. The claim needed substantial involvement from the Directors and would be costly and problematic for the Administrators to pursue. The Judge agreed.
However the Directors wanted to take assignment of the company’s claims against the Bank. They had the in-depth knowledge to pursue the claims with much more likelihood of success than the Administrators. The Administrators declined to assign the claims but the Judge did not believe that this was justifiable. Under the proposed assignment, any success would result in some benefit to the creditors and if the claims failed then there would be no loss to the creditors. The Judge ordered that the assignment should be undertaken, with an indemnity from the assignees (in this case the Directors).
This case emphasised that IPs should pursue all commercially sensible options. If they do not then you can force them to do so.
However before taking such costly and Draconian measures it has got to be worth sitting down with the IP and getting them to explain the reasons for their decisions. After all IPs do not act arbitrarily – there is always a good reason for their actions, and it’s usually to do with commercial viability. More than anything else this case illustrates that the most valuable criterion when choosing a professional advisor is that you have a good line of communication with them.
The punchline is that you can bully your IP but we would prefer that you don’t bully us. We would much rather have constructive conversations to ensure that these sorts of misunderstandings or disputes do not have been taken to Court to be resolved. It is much more comfortable and significantly cheaper to all sit around a table with a nice cup of coffee. Coffee and conversation is also available if you need advice in dealing with an incumbent IP whose actions you do not agree with or do not understand and we can assist you with this process.
PS we also provide tea!
Back to top