Creditor Pursuing Insolvent Estate of Deceased Father

wharfviewfine

The company’s solicitors have already said they’ll pursue an insolvency administration order, my understanding is there’s nothing for them to lose by doing so.

Keep_pedalling

Does your mother have the assets to settle the proven debt? If this goes to court her costs could be way over the amount owe.

Marcon

wharfviewfine said:

The company’s solicitors have already said they’ll pursue an insolvency administration order, my understanding is there’s nothing for them to lose by doing so.

Given the costs involved, and the fact they are only going to be entitled to a proportion of the estate's assets rather than full settlement (unless they have a 'secured' debt, which doesn't sound probable from what you've posted), it is likely to be scare tactics. I can only repeat my previous comment that she needs proper legal advice from a responsive professional.

doodling

Hi,

There are two courses of action available to the creditors (albeit they interact):

1. That the estate was incorrectly administered and that some creditors did not receive the correct sums due to them.  There is the potential for a claim from the disadvantaged creditors for the difference between the sum they received (in this case £0 and what they should have received).  Once the size of the debt is established then this would be an easy claim for the creditors with a high chance of success.

2. That whilst the estate was insolvent the deceased had joint ownership of a property and therefore that value could be accessed via an insolvency administration order.  This is a more legally complex claim with correspondingly higher legal costs and reduced chance of success (although on the face of it still pretty good).

As someone on the other end of this process, you want to settle for the smallest possible amount of money.

The first thing to do is to establish the amount of money that could be due assuming that the creditor's claim is valid, both in the case where the administration had been correct and in the case where there were funds available to cover any claim.  This sets handy minimum and maximum values on what might be owed (before worrying about the possibility of legal costs).

You then need to look at whether there are any uncertainties which you can exploit to bring down that maximum value, e.g.:

• It sounds like the creditor might have difficulty evidencing the amount they are owed so that aspect needs to be fully explored - they might be asking for £30k but if half of that is supported by evidence that could be successfully challenged (and you would need advice on the likelihood of that) then maybe £15-£20k is a sensible offer.
• Pursuing a insolvency administration order is a higher cost and less certain process so the creditor might be willing to exchange certainty for a reduced sum - but don't get your hopes up here, you will need professional advice on the creditors likely chance of success so that you can judge what kind of reduction (if any) in your offer that might entail.
• In exceptional circumstances the court might take into account the deceased's widow in making an insolvency administration order - this could mean that the debt becomes a charge on the property to be paid at some point in the future when it is sold.  You would need advice on what constitute exceptional circumstances and whether the possibility of their existence might result in the creditor accepting a lesser sum now rather than pursuing a case for a full sum at some (potentially unknown) point in the future.

For what its worth, I think they have a good chance of success in an insolvency administration order so you probably don't want to risk going to court (with all the costs that entails) unless the creditor is being completely unreasonable in working out how much is owed - without prejudice negotiation sounds like the way forward.

At the end of the day you want to make an offer that convinces the creditor that if they do go to court then there is a high risk they will end up worse off, for example because the court will award less than the offer so they end up picking up everyone's legal costs or because they win but then discover that they won't see their money until his widow passes away in 20 years' time.

I'm not a lawyer and don't know the all details though - you need to make sure that you have legal support you trust to advise you for all of this.

wharfviewfine

Thanks again for your help everyone, 

Luckily yes my mother does have some capital to pay for costs going forward from the inheritance of her parents passing away.

Based on the responses it seems sage to stick with the legal representation and steer them toward establishing the debt as unsecured before then initially coming to an arrangement to settle at the proportion of the estate to which they were disadvantaged without prejudice in order to dissuade them from pursuing an insolvency administration order. In the case of the former I think the figure would be around £6,000-15,000 which could still be partly covered by the sale of remaining assets but will have my mother discuss this more accurately with her solicitor to come to a sensible figure.

In tandem I imagine it’s probably good to expedite this as much as possible so as not to drag things out for them, whilst as @doodling so comprehensively put, reminding them of the uncertainties of the court route of action, namely evidence, legal costs, and the potential for exceptional circumstances.

Much appreciated!

doodling

Hi,

wharfviewfine said:

[...]

In tandem I imagine it’s probably good to expedite this as much as possible so as not to drag things out for them, whilst as @doodling so comprehensively put, reminding them of the uncertainties of the court route of action, namely evidence, legal costs, and the potential for exceptional circumstances.

Much appreciated!

Just to be clear, as you are dealing with the creditors solicitors, there is no point is mentioning any of those potential uncertainties if your own legal advice tells you that they aren't uncertain - the opposition will know that too and it will look like you're clutching at straws.

Your negotiatons need to be driven by your own legal advice on the strengths and weaknesses of the creditor's case.

wharfviewfine

doodling said:

Hi,

wharfviewfine said:

[...]

In tandem I imagine it’s probably good to expedite this as much as possible so as not to drag things out for them, whilst as @doodling so comprehensively put, reminding them of the uncertainties of the court route of action, namely evidence, legal costs, and the potential for exceptional circumstances.

Much appreciated!

Just to be clear, as you are dealing with the creditors solicitors, there is no point is mentioning any of those potential uncertainties if your own legal advice tells you that they aren't uncertain - the opposition will know that too and it will look like you're clutching at straws.

Your negotiatons need to be driven by your own legal advice on the strengths and weaknesses of the creditor's case.

Appreciate that, thank you, and will defer to them in that regard.

Hoenir

wharfviewfine said:

The only aspect of this machine that is material is a computer panel which was purchased to begin the work (probably around £6,000 asset value).

What happened to this ? 

wharfviewfine

Hoenir said:

wharfviewfine said:

The only aspect of this machine that is material is a computer panel which was purchased to begin the work (probably around £6,000 asset value).

What happened to this ? 

This is still around, my mother’s trying to find a contact within the industry to value/purchase it as it’s quite a niché item.