It seems to be almost a sport to insolvency administrator at the time, to bring preference actions against directors and suppliers, from which they hope to increase the value of the insolvent estate.
- Preference actions against directors
Insolvency administrators sue both owner-managing directors as well as hired directors for repayment of bonuses, commissions and other forms of special remuneration exceeding the monthly fixed salary. Payments up to 10 years (from the filing of the application to open insolvency proceedings) can be asserted by the insolvency administrator by claiming that the director
- received such payments under intentional fraudulent trading against third party creditors by the debtor and
- that the director knew or should have known about the intentional fraudulent trading.
As one of our core specializations is in the area of restructuring and insolvency, we are able to argue with the insolvency administrator on eye level and have successfully defended our clients in a number of preference actions commenced by insolvency administrators.
- Preference actions against suppliers
Suppliers are increasingly exposed to actions by insolvency administrators and are sued for reimbursement of monies received for services or goods provided. The supplier is then usually upset twice. Not only that you have to expect that you won’t be able to recover your latest claims against the debtor due to the fact that insolvency proceedings often are closed with a very small ratio for the creditors. You will have to write off part of your claim. On top of this, actions are brought against you for repayment of monies that you have received prior to opening of the insolvency proceedings for goods and services already provided by you.
Don’t fret, but contact us. We have various experiences with this sort of actions and have defended a variety of clients successfully against such claims.