Business

Insolvency Investigations

BUSINESS OBJECTIVES ACHIEVED

Forbes Solicitors' insolvency investigations insolvency solicitors offer expert legal advice on issues relating to insolvency and criminal investigations. When it comes to insolvency investigations our solicitors assist with a range of issues, including fraudulent trading, wrongful trading, and misfeasance. We understand the complexities of insolvency law as it relates to criminal investigations and work closely with our clients to achieve the best possible outcome.

What is an Insolvency Investigation

An insolvency investigation is an examination of a company's financial records and activities to determine if it is insolvent or has been mismanaged. It may involve interviews, document reviews, and analysis of financial data.

When a company runs into difficulties, those involved in the management of that business can face allegations of criminality over the way the business was run prior to its insolvency. The team at Forbes are experienced in the representation of both companies and individuals at this extremely stressful time.

If you are facing the possibility of insolvency and are concerned about the prospect of a criminal investigation it is essential to seek expert advice immediately.

If instructed early we will always endeavour to avoid a report to the Insolvency Service investigation team. This is normally achieved by negotiating and co-operating wherever possible. Such cases often require a multi-disciplinary legal team that can assist you to navigate issues relating to insolvency, company, employment, and criminal law. Forbes Solicitors specialist insolvency defence team can offer you this bespoke service at a very reasonable cost.

Insolvency Investigations

Section 432(2) of the Companies Act 1985 gives the Secretary of State the power to appoint an inspector(s) to investigate the affairs of a company if it appears that the company is being conducted:

with the intent to defraud creditors or the creditors of any other person
for a fraudulent or unlawful purpose
in a manner which is unfairly prejudicial to some part of its members or where any actual or proposed act or omission of the company is or would be so prejudicial
where persons concerned with the company's formation or management have been guilty of fraud, misfeasance, or other misconduct towards members
where company members have not been given all the information which they might reasonably expect.

Warrants

Section 448 of the Act provides a search warrant can be obtained if there are reasonable grounds for believing:

there are on any premises, documents where production has been required but which have not been produced
an offence has been committed for which the penalty on conviction on indictment is imprisonment for a term of no less than two years and there is documentation on any premises relating to whether the offence has been committed
that if production was so required, the documents would not be produced but would be removed from the premises, hidden, tampered with or destroyed.

Disclosure

Section 447 of the Act provides the Secretary of State may direct, or the investigator authorised by the Secretary of State may give directions to a company/or any other person to produce documentation or information required.

This power is not restricted for use against the company directors but can also be directed towards any person connected with the company

Interviews

Company Investigators may also seek to obtain information by interviewing company directors, senior management, employees and others connected to the company.

Possible outcomes

An investigation by the Insolvency Service can be devastating to a business both in terms of its reputation and also the potential consequences which include:

Issue of a Warning Notice
Winding up of the company
Director Disqualification Proceedings
Criminal proceedings

Common criminal proceedings include offences of fraudulent trading, failure to preserve company accounting records, and failure to disclose property to the Official Receiver.

Why choose our criminal investigations solicitors?

When in need of criminal investigations solicitors, the team at Forbes Solicitors are dedicated to providing exceptional legal representation to clients facing criminal charges. With years of experience and a deep understanding of the criminal justice system, we have a proven track record of achieving successful outcomes for our clients. We are committed to providing personalised attention and strategic guidance throughout the entire legal process. Our team is passionate about defending the rights of our clients and will work tirelessly to ensure the best possible outcome for your case. Choose us for unparalleled legal representation and peace of mind.

How can our criminal investigations lawyers help?

Our bespoke multi-disciplinary team will provide initial advice after the Insolvency Service has confirmed it will be launching an investigation or prosecution.
We will communicate with the Insolvency Service on yours or the company's behalf. We will negotiate so as to achieve the best possible outcome.
Advice and representation during any interviews and meetings required by the Insolvency Service or any other agency.
Ensuring yours and the company's rights are protected and upheld throughout the process, including when searches of corporate premises are being carried out.
Representation of you, the company or any of its officers if the case goes to Court.

Contact our highly experienced solicitors today to benefit from their extensive knowledge in providing expert legal services and support for Insolvency and Criminal Investigations matters to clients nationwide. Speak to them today for assistance.

Additional Information

Who can initiate a criminal investigation into insolvency?

Criminal investigations into insolvency can be initiated by the Insolvency Service, the police, or other law enforcement agencies. The Insolvency Service has the power to investigate and prosecute individuals or companies suspected of committing offences under the Insolvency Act 1986, such as fraudulent trading or wrongful trading. The police and other law enforcement agencies may also investigate insolvency-related crimes, such as money laundering or fraud.

What are the consequences of being subject to a criminal investigation for insolvency?

The consequences of being subject to a criminal investigation for insolvency can include fines, imprisonment, disqualification from acting as a director, and damage to one's reputation. The investigation may also result in the recovery of assets and compensation for creditors. It is important to seek legal advice if facing such an investigation.

What types of offences can be investigated in relation to insolvency?

Offences that can be investigated in relation to insolvency include fraudulent trading, wrongful trading, misfeasance, and transactions at an undervalue or preference. These offences are outlined in the Insolvency Act 1986 and can result in penalties such as fines, disqualification from acting as a director, and even imprisonment.

How long does a criminal investigation into insolvency typically take?

The length of a criminal investigation into insolvency can vary depending on the complexity of the case, but it typically takes several months to a few years to complete. The UK law does not specify a specific timeframe for such investigations.

What are the potential penalties for being found guilty of an insolvency-related offence?

The potential penalties for being found guilty of an insolvency-related offence include fines, imprisonment, disqualification from acting as a director, and personal liability for the company's debts. The severity of the penalty depends on the nature and severity of the offence committed. For example, fraudulent trading can result in up to 10 years imprisonment and/or an unlimited fine, while wrongful trading can lead to personal liability for the company's debts and disqualification as a director.

What should I do if I am under investigation for an insolvency-related offence?

If you are under investigation for an insolvency-related offence it is important to seek legal advice immediately. You should cooperate with the investigating authorities and provide them with all relevant information. It is also important to preserve all relevant documents and records. If you are charged with an offence, you should seek legal representation and prepare a strong defence. It is important to note that insolvency-related offences can carry severe penalties, including imprisonment and fines.

Can I continue to run my business while under investigation for insolvency-related offences?

It depends on the specific circumstances of the investigation. If the investigation is ongoing, it is important to seek legal advice to ensure that all actions taken by the business are compliant with UK law. If the investigation leads to criminal charges, it may be necessary to suspend or cease business operations until the matter is resolved.

How can I prevent my business from becoming subject to a criminal investigation for insolvency?

To prevent your business from becoming subject to a criminal investigation for insolvency, it is important to ensure that you are meeting all of your legal obligations as a director. This includes keeping accurate financial records, paying taxes on time, and seeking professional advice if you are experiencing financial difficulties. If you are unable to pay your debts, it is important to take appropriate steps to address the situation, such as entering into a formal insolvency process. Failure to comply with these obligations can result in criminal charges under UK law.