Business restructuring and insolvency advice is mostly required by accountancy firms, firms of chartered accountants, CFA firms, domestic and foreign banks, insurance companies, and other commercial lenders and investors, corporate suppliers, and on the debtor side, it is required by companies in financial distress in restructurings across a wide range of industries. Insolvency proceedings include insolvency office-holders raising ‘outward claims’ while trying to show an increase in the assets available for distribution, defending against such claims, as well as suggesting both companies, court appointed administrators, liquidators and trustees, and their creditors on claims/ debts/ liabilities professed against the insolvent estate.
Insolvency and restructuring lawyers must be able to deal with the most complex transactional issues spanning multiple jurisdictions. With that end in mind, Insolvency and restructuring lawyers ought to have substantial experience working with local lawyers in foreign (‘offshore’ jurisdictions) and domestic jurisdictions where they themselves does not have a law office. In large international disputes, coordinating the efforts of local counsel in multiple jurisdictions is an important element in the successful conduct of insolvency proceedings.
Insolvency and restructuring proceedings may involve:-
- Fact finding, investigation and risk analysis
- Alternative dispute resolution
- Assist and advise in litigation in courts around the world
- Inside court skill in insolvency jurisdictions including filing and responding to motions or court/ tribunal proceedings, trials and appellate level arguments
- Crisis and communications management
- Emergency proceedings and preliminary/ interim relief through injunctive orders
- Electronic discovery and disclosure
- Enforcement and recognition of foreign decisions and judgments
Prior experience in negotiating and conducting court cases of such claims is important. Lawyers establish a network of chartered accountants and other experts and around the world who develop the relevant evidence on the basis of valuations, liquidity, solvency tests, and other critical accountancy and financial issues. In some cases, the parties to the transaction might be based in different jurisdictions or the transaction might involve assets held in different jurisdictions or assets might have been transferred abroad. Such matters have cross-jurisdictional scope. In such cases, insolvency experts should immediately and effectively respond to client needs and requirements.
Insolvency litigation: collateral disposition and protective legal actions in anticipation of insolvency or bankruptcy
Insolvency Lawyers legally represent clients as secured creditors interested in liquidating their collateral. They also undertake the sale through judicial proceedings, auctions and private dispositions of foreign and domestic properties including factories, inventory and receivables, manufacturing houses, office buildings, securities, shopping centers, textile mills and other financial assets. This may involve negotiations and, where ever necessary, court cases with other stakeholders like unsecured creditors.
Insolvency and restructuring advocates should have in-depth knowledge about enforcing security, advising clients who are on the brink of bankruptcy, insolvency or restructuring and the like on termination of existing contracts. Businesses need experts skilled in maintaining access to IP Portfolios with the help of IP-license rights in distressed situations in close association with Intellectual Property lawyers. When structuring transactions, the experience to advise certain structures and covenants to protect the interests of our clients in the event of the insolvency of the opposite party is crucial.
Insolvency litigation: Enforcement of rights in distressed supply chains
When specific domestic or foreign markets become distressed due to changes in demand, or unforeseen change of prices or certain products becoming obsolete, market participants must reconsider their choices while enforcing their rights against such aforementioned distressed market participants. In such cases, lawyers represent manufacturers or suppliers on all levels of the supply chain to enforce existing rights under long-term supply agreements. Apart from price adjustment issues through terms and conditions for price index or force majeure clauses, lawyers assist in legally enforcing such rights during times of distress or the insolvency/ bankruptcy of either party to the agreement.
When choosing a particular strategy businesses must consider potential adverse effects of a party becoming distressed or subject to formal insolvency/ bankruptcy or restructuring proceeding.