Insolvent Trading claims and Public Examinations

Transcript of Viedo

Hi and welcome to the Insolvency Experts — I’m Steven Kugel

In a claim for insolvent trading the Liquidatorwill consider undertaking a Public Examination prior to launching a full scale claim for Insolvent Trading. In the last episode, we considered the motivation for this course of action.

Public Examination

A Public Examination is a forum available to a Liquidator, who may not be obtaining the co-operation he requires to conduct his investigations into the affairs of the company.

In this way, the Liquidator can call to an open court, the directors, related persons and any other person that may have knowledge of the company and in that forum ask them any question regarding the examinable affairs of the company in liquidation.

In addition to this, a Liquidator can subpoena records not only of the company but also the personal records of the director, his spouse or children or other persons where it may be suspected funds have been placed. And believe it or not, this type of behaviour does occur when people are in survival mode or at times when they are watching what they see as their personal wealth evaporate before their eyes.

A Liquidator will also use the forum of a Public Examination to test the defences the directors might raise in relation to the insolvent trading claim as has been explained in earlier sessions.

A Public Examination will do all the things I have noted BUT, apart from building huge pressure on the director, that I may say often leads to settlement discussions, the Public examination itself is not a forum in which any award for damages will be made. It’s an investigative tool only.

If a liquidator wants a financial award for damages, he must continue on after the Public Examination assuming he has obtained sufficient information and evidence to do so and then commence the actual claim for damages through action for Insolvent Trading.