Litigation in insolvency proceedings is extremely common. The type of litigation will depend on the insolvency process as well as the functions and powers of the relevant insolvency office-holder. In this regard, it is more common for a liquidator to bring proceedings on behalf of an insolvent company than an administrator.
In addition to adversarial proceedings (such as antecedent claims and claims against directors) insolvency office-holders can also make application to court for directions on issues that may arise during the insolvency process and administrative matters (such as an application to extend the term of an administration).
This subtopic only considers adversarial proceedings and assumes that the insolvency office-holder has not assigned the claim (where otherwise entitled to do so).
A key consideration for the insolvency office-holder is whether they have the power to issue the proposed proceedings. This will depend on the type of proceeding and the relevant insolvency process. For example, an administrator can only bring a wrongful trading claim or fraudulent trading claim where the conduct giving rise to the claim occurred...
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