Fraud and the insolvent company

Robert Tateossian, a solicitor at the London office of DLA explains that whilst liquidators of insolvent companies have substantial powers to tackle fraud, in many cases, such powers provide little comfort to creditors.

When a company goes into liquidation, the inevitable question asked is was it caused by fraud or other misconduct? Provisions in the Insolvency Act 1986 give liquidators’ duties and powers with regard to the investigation of insolvent companies. The Act also contains a number of remedies available to liquidators to recover monies for the benefit of creditors. However, in practice, problems arise which lead to many frauds remaining uncovered or unchallenged.