Reporting, liability and confidentiality for insolvency

Reporting

Generally, when dealing with insolvency situations there is more urgency than with the practitioner's normal day-to-day workload. It is important that the practitioner agrees the timetable at the outset and that there is no room for ambiguity. It is also important that the practitioner agrees exactly what the client expects in terms of delivery of service and appropriate timescales, at the outset of the instruction.

The client may have their own timetable to meet when reporting. For example, an insolvency practitioner will have statutory timetables to meet when acting as an administrator. A mortgagee may have timetables to meet when considering bad debt provisioning.

• When acting for a landlord: while there is no material variation from a normal agency, valuation or landlord and tenant type instruction, the landlord may have concern if, for example, rental arrears are building up, there is immediate concern regarding the solvency of the tenant or a financially relevant date, such as the end of a budget period, is approaching.
• When acting for a tenant: while there is little difference to a normal agency, valuation, or landlord and tenant type instruction, the tenant may be under pressure from the landlord, may have an immediate pressing financial issue and may be at risk of lease forfeiture, bailiffs seizing goods, etc.

Liability

Whether advising an insolvency practitioner, a mortgagee, a landlord or a tenant, this is generally no different to a normal agency, valuation or landlord and tenant instruction in terms of liability and a normal client-agent relationship will exist – subject to the additional duties assumed by a practitioner who acts as a receiver.

Confidentiality

Generally, once an insolvency event has occurred, and either a fixed charge receiver and/or an insolvency practitioner is appointed, the borrower, landlord or tenant is in some form of formal insolvency and this is a matter of public record.

Before this, the possibility of a party being the subject of insolvency proceedings is likely to be confidential. For example, the unauthorised disclosure of the financial position of the company or preparations for insolvency could:

• prejudice any subsequent insolvency proceeding
• panic other creditors into exercising any rights they may have or
• trigger key employees leaving the company.

If a publicly listed company is involved in the process, information may be share price-sensitive.