Litigation and insolvency are familiar bedfellows. At Mercer & Hole our insolvency office-holders often litigate to effect recoveries for the benefit of creditors. But our interest in legal proceedings and the court process doesn’t stop there. Both Dominic Dumville and I have experience of the role of insolvency practitioners as Expert Witnesses.
Typically an insolvency expert will report to the court on the practice of insolvency when a claim is made against an insolvency practitioner. In these cases our evidence is usually sought by the “good guys”, whether they’re pursuing the claim or defending it. Alternatively, the court may need our accounting expertise to assist it in determining when a company or debtor became insolvent, a question that often arises when insolvency office-holders pursue claims. Again, we usually find ourselves being brought in by claimants with strong claims and by defendants when the claim is weak. Whoever instructs us, the function of the expert is to assist the court.
As experts, we are deeply knowledgeable about our subject and are able to explain our opinions clearly. In addition, we have to withstand sometimes hostile cross-examination. This expertise stands us in good stead in our daily work as advisers and insolvency office-holders.
In cases where professional negligence is alleged the question inevitably boils down to: “What, in the circumstances of the case, is the range of conduct of a reasonably competent insolvency practitioner acting with ordinary care?” The more accounting-type questions can similarly be boiled down, often to: “Was the company/debtor insolvent on the date(s) of the transaction(s) being challenged?
Often, experts narrow the issues between the parties in such a way as to encourage settlement. Where there is a trial, the judge will decide the matter based on all the evidence presented in court, not just that of the insolvency experts.