While most cases of business insolvency, particularly those of an involuntary nature, may come with some level of dispute between directors and shareholders, contentious insolvency can be particularly divisive. It most commonly stems from more serious issues within the company, such as fraud and wrongful trading.
The task of resolving contentious insolvency cases will usually fall to forensic accountants performing a forensic insolvency investigation. This is because contentious insolvency is considered to be highly complex and requires the highest level of attention-to-detail. This is where forensic accountants excel.
What makes contentious insolvency cases particularly difficult is the fact that company directors can face serious ramifications if found to be in breach of their obligations or duties. These potential consequences can range from personal liability for company debt, right the way through to having criminal charges brought against them.
Forensic insolvency is often a multi-disciplined process that sees forensic accountants join forces with insolvency practitioners and other areas of corporate financing to carry out a thorough evaluation of the case. It can even result in the location of hidden assets from businesses where it was assumed that no tangible assets existed.
Without the input of a forensic accountant, contentious insolvency cases can be a minefield to navigate. There is huge scope for key assets to go unaccounted for, and the sheer complexity of the circumstances means only those with a keen eye for detail and specialist expertise in going through information with a fine tooth-comb will be up to the job. Indeed, the involvement of a forensic accountant is often vital to securing a positive outcome for the client.