1) What is Corporate Recovery?
The Corporate Recovery team deals with companies in financial difficulties. When this occurs, the management, shareholders or creditors of the company will look to take it down one of several insolvency processes. The most common processes are liquidation, administration and receivership, but there are many others and each have their own objectives and specific rules. For example, the administration process aims to rescue the company by returning it to financial health, whilst a company voluntary arrangement allows the company to strike a deal with its creditors to ensure they are at least partially paid back.
In the Corporate Recovery team, it is often the case that we are not acting for the ‘company’ in financial difficulty, but are instructed by insolvency practitioners (IP’s) who manage the company’s insolvency process. For example, when a company is going into liquidation, a liquidator is appointed who will instruct on all matters that require specialist legal advice.
2) The Corporate Recovery team are split into two: contentious and non-contentious
Contentious work, very simply put, is when parties are in dispute and, in order to resolve the dispute, they can negotiate, arbitrate, mediate or litigate. Insolvency law provides many scenarios where it is necessary for the liquidator to bring an action against the failing company. As a trainee, you might be involved in actions against directors which will involve assisting in compiling the evidence and liaising with the IP. Trainees often get experience of emergency injunctions, where we seek to make a company comply with the Insolvency Act. I have already helped prepare for and attended such a hearing, which for me is the ultimate example of ‘law in action’.
You’ll not only be applying insolvency law, but will also be ensuring that your work complies with the civil procedure rules. This is great experience for a trainee, allowing them to gain exposure to both litigation and insolvency law.
3) Non-contentious work is ‘transactional’
The non-contentious team is focused on appointments and sale transactions. Trainees can expect to see the full spectrum of both processes. When a company shows signs of financial distress, a bank may ask us to complete a security review. This involves carefully analysing facility, security and property documents to look for any deficiencies in the bank’s ability to enforce its security (attention to detail is key), drafting court forms and supporting statements to appoint administrators or petition the court to wind up the company. This is often at short notice, so the ability to work under pressure is crucial – and be prepared to make the dash to court to file!
Finally, if when working with the IP, you will help draft and negotiate sale agreements and ancillary documents to sell the business as a going concern, or its assets, for the benefit of the creditors. A trainee will need to familiarise themselves with what is acceptable in a sale by an IP, which contrasts with that which is typical in a transaction completed by the Corporate team.
4) We often act for the same clients
Working in the Corporate Recovery team often involves working with the same IP’s. This allows for the development of close client relationships. Working closely with the same clients is considered an advantage and much is done to invest in client relations. The world of insolvency, in general, recognises the importance of knowing individuals both professionally and personally. In fact, there is a Midlands restructuring society which organises a large variety of social events, and the emphasis on client relationships is definitely something I have enjoyed as part of my seat. From netball matches to quiz nights and networking evenings, life as an insolvency solicitor allows for the opportunity to be sociable and to get involved in the wider business community.
5) As a trainee, there is a great level of responsibility
As a trainee, the work I have been given is varied and interesting and there is an emphasis on research – in order to comply with the Insolvency Rules, we need to know how the law interacts with each particular set of circumstances. Before coming to the seat, I understood in theory what corporate recovery involved, but as insolvency was only a small element of the course on the LPC, I can now see that it has many different angles. The team is supportive, acknowledging that insolvency law is not always clear cut, and there is always someone around to answer my questions.