Steven WiseglassA successful outcome for creditors of a law firm which went into liquidation has made it a pleasing start to the new year for Inquesta’s forensic insolvency team.

It is the latest case in which we have achieved a positive result despite the odds being seemingly stacked against us. We took it up on a purely speculative basis, with no guarantee of success.

However, our patience, tenacity and persistence has paid off, enabling us to recover all the monies owed to the creditors. One of them was moved to write to us, saying: “We will be eternally grateful for you taking a chance on our matter. We are well aware that it is unusual to find a liquidator who is willing to progress a matter without having any funds on account.”

The firm of solicitors in question was a limited liability partnership. Some years ago, some of its members transferred the business and assets to a new limited company in a transaction which gave them a significant tax advantage. It enabled them to claim entrepreneurs’ relief on the deal, thereby lowering their tax bill. The business was sold for £1.6m but the LLP left behind creditors owed just over £120,000. Two-and-a-half years later, the creditors issued a winding-up petition against the LLP, which was duly placed into liquidation.

Steven Wiseglass was appointed liquidator, and applied on behalf of the creditors for a public examination in court of the current and former LLP members. I instructed a barrister to conduct this examination and, in the meantime, I began an investigation into the LLP’s affairs, which involved obtaining company records, bank transactions and account details, and other relevant information.

The public examination and the financial data I obtained helped me to establish our case and, having investigated the transaction they entered into, I issued proceedings in draft against four members of the LLP for the whole £1.6m.

In keeping with pre-action protocol for litigation, we offered them the opportunity of resolving the matter via mediation, which they accepted.
After two days of discussions, they agreed to settle in full the money owed to creditors of the LLP. The case clearly demonstrates the benefits of undertaking a forensic insolvency investigation, and the advantages of Inquesta’s specialist investigative expertise.

For further information about our forensic insolvency service please contact Steven Wiseglass.