Within the UK the insolvency profession is a relatively small one, comprising only around 1,750 licensed practitioners, not all of whom are practising. However, of those practitioners that are active, many will undertake a variety of official roles and insolvency appointments, including acting as nominees, supervisors, liquidators, trustees in bankruptcy and receivers.
All licensed insolvency practitioners must belong to a recognised professional body. As well as providing regulatory oversight, these bodies seek to promote and maintain the standards of the profession. Included amongst them is the Insolvency Practitioners Association (IPA), the Association of Chartered and Certified Accountants (ACCA) and the Institute of Chartered Accountants of England and Wales (ICAEW).
Common mistakes by negligent insolvency practitioners
Historically there has been an inverse correlation between the level of professional negligence claims against insolvency practitioners and the health of the national economy. Latterly, however, and despite the economic fallout from the financial crash of 2007/8, there has been little sign of a dramatic increase in claims against insolvency practitioners. But that is not to say that the profession is devoid of claims and while high levels of credit dependency exist within the wider economy, a latent prospect of a surge in claims against insolvency practitioners remains.
Some common mistakes that can give rise to successful claims against negligent insolvency practitioners are:
- Failing to take account of assets or liabilities when preparing financial status reports
- Failing to make reasonable enquiries into the historical dissipation of assets
- Failing to realise the best price reasonably obtainable for assets
- Failing to achieve a reasonable settlement of claims received
- Failing to apply money or property in a lawful manner
- Failing to prosecute claims on behalf of a company or individual within prescribed time limits
How to claim against an insolvency practitioner
Most claims are commenced by correspondence and by following the procedures set out in the Professional Negligence Pre-Action Protocol. While in some cases it may also be necessary to institute court proceedings, a considerable number of claims are resolved without the need to do so.
Answers to many of the practical questions we frequently get asked about making a claim against an insolvency practitioner are set out in our guide: Professional negligence claims: Your key questions answered
Assessing the merits of a claim
In contrast to many other professions, the conduct of insolvency practitioners is largely governed by an intricate and voluminous web of statutory provisions, over which principles of common law are laid. As a result, and before embarking on a claim against an insolvency practitioner, a careful assessment will need to be undertaken of a number of important issues, including:
- The scope of the legal duties owed by the insolvency practitioner
- Any actions taken by the insolvency practitioner to comply with those duties
- The nature and extent of the loss caused by any breaches of those duties
This can be a complicated process and input from an expert witness will frequently be required to ascertain the merits of any claim.
Time limits for claims against insolvency practitioners
There are a number of important reasons for acting promptly when a mistake has been made or discovered. One of these are the time limits that apply to all professional negligence claims. These time limits, some of which are easy to miscalculate, are explained in our guide: Time limits for professional negligence claims – FAQs
Specialist legal advice
As professional negligence specialists, we act for clients nationwide to resolve claims against a wide range of professionals, including insolvency practitioners. As you can discover here, the service and advice we provide to our clients is unique in a number of important respects.
If you would like to arrange an initial consultation with us, free of charge or commitment, please do not hesitate to contact us on 0800 195 4983 or by email at firstname.lastname@example.org.