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Financial and economic expertise

Financial and economic examination in bankruptcy cases

In the bankruptcy cases Financial and economic examination needs to draw an objective picture of the company and to find the motives of its management.

The results of the examination are a strong instrument of evidence in both defence and attack.

What specialized expertise can do

Develop and justify a plan to eliminate the insufficiency of property
Set the moment of objective bankruptcy
To collect evidence base for prosecution or for protection against subsidiary liability
Confirm or refute the insolvency of the debtor
Detect deliberate or fictitious bankruptcy
Identify transactions aimed at concealing property
Determine the cause of bankruptcy
Identify who it is beneficial

When expertise is needed

The solution of any dispute is broader than legal procedure. Special knowledge helps to win a dispute in court or even to resolve it in the pre-trial stage. Each project is being worked on by a team of our experts with different competencies. We can undertake a deep study, assist each party at any stage.

Before trial:

assess the company’s prospects, develop a plan to overcome the crisis;
we will carry out the pre-trial examination (or several) to collect evidence base for the defence of the positions of our party;
we will review the financial analysis of the arbitral manager and help challenge his actions.

In court:

we will draw up reviews, challenge the opponent’s expertise;
we will uphold the results of our examination, we will not let the opponent defeat it through a review;
we will analyse the activities of the management of the organization to bring or protect against attraction to subsidiary liability.

We will assist lawyers or arbitral manager 24/7

We will assist lawyers or arbitral manager by covering their specialized expertise requirements for 24/7

What expertise we conduct

The following expertise can be solved both by attack and defence:

objective bankruptcy;
reporting of the debtor;
the impact of the disposal of the asset on the debtor’s economic condition;
transactions of the debtor for their equivalence, attribution to ordinary economic activities, negative consequences for bankruptcy;
intentional and Fictitious Bankruptcy;
financial flows, including for the determination of interrelationships.

What tasks the expertise is doing

Financial and economic examination of arbitral managers, debtors, creditors, third parties or court resort to:

In determining signs of deliberate bankruptcy

Bankruptcy is considered to be deliberate if the management or founders have committed acts that are deliberately incapable of a legal entity to meet the creditor’s demands. In the event of major damage, this is a criminal offence.

To determine the fact of deliberate bankruptcy, the expert examines the dynamics of the debtor’s capacity to pay for at least two years, and, when a significant deterioration, we seek specific transactions that were concluded during that period on non-market terms and caused damage to the debtor.

Financial and economic
expertise allows creditors to:

prove the intentionalness of bankruptcy;

to bring the shadow director to subsidiary liability;

to recover the personal property of the controlling persons.

Financial and economic examination allows the debtor to:

prove the absence of intent in the actions of the shadow director;

prove that the person did not make decisions (not a shadow director);

avoid subsidiary liability.

Subsidiary liability

Subsidiary liability implies the personal liability of the controlling debtor, that is, it gives creditors an additional opportunity to recover the debt not from a bankrupt legal entity, but from individuals whose actions have led to its bankruptcy.

The expert performs an examination of the debtor’s accounts, determines the moment of objective bankruptcy, its causes and conditions to determine the perpetrators and the extent of their responsibility.

Financial and economic expertise allows creditors to:

to establish the fact of deliberate bankruptcy;

determine the true beneficiary from the bankruptcy of the legal entity;

prosecute perpetrators to subsidiary liability.

Financial and economic examination allows the debtor to:

prove that the controlling person carried out in good faith, made reliable accounts, verified transactions, adhered to a plan to resolve the crisis;

prove that the person did not make decisions (was a nominal manager);

reduce or avoid subsidiary liability.

In contesting or defending against dispute transactions

Often, unfair debtors are already in preparation for bankruptcy trying to withdraw liquid assets from the field of view of creditors and authorized bodies. To do this, they use the sale of property, collateral, assignments of claims and other types of transactions.

The expert checks transactions on the equivalence of counter-performance obligations and counterparties on affiliation to challenge vicious transactions, to declare them invalid and to return the property transferred to the contractors to the tender.