In The Event Of Insolvency The Best Solicitor Should Be Appointed For Insolvency Services

European debt crisis is one of the recent incidents that have affected the sustainability of Europe

. It has changed the economic climate of Europe although Europe is known to have seventh largest economy of world as per Gross domestic product. As the consequences of debt crisis many finance providing individuals, companies and banks have suffered huge loss and most of them have gone into insolvency. The debt crisis was so huge that the individuals, companies or banks cannot operate and some were not bailout by European Union and they went into insolvency. When the company or bank goes into insolvency then the debt providers appoint insolvency solicitor for taking insolvency Service.

Insolvency solicitors are the practitioners of law and they are well aware of all the parts of law. Some of them specialize in insolvency services but they are good enough to tackle different situations. When the company goes into insolvency then the debt providers not the equity providers are responsible to appoint insolvency solicitor. The purpose of appointing insolvency solicitors is that they work out on the reasons of default and then later they sell the assets of company. The sale proceeds from the assets of the company are then used to pay the debt to the debt holders. Sometimes the assets of the company are not enough to pay the complete amount or sometimes not all the debt holders receive the money that they invested in the company.

The priorities to pay debt holders are set according to the secured and unsecured debt. Secured that holders are paid before unsecured in the event of insolvency. If the money remains after paying full amount to secured debt holders then unsecured debt holders are paid. After paying all the debt holders the money stays then this is distributed among the shareholders in the proportion of their shareholdings. If the debt holders fail to hire insolvency solicitors then this is done by the government. The government appoints a person who provides insolvency services regarding that company. The main reason for companies that goes into insolvency is they do not have enough liquid assets to pay off their debt holders and in that case the debt holders have to insolvent the company. Insolvency services are not free of cost; the solicitors charge their fees for all the working that is done is respect of insolvency.

The debt holders should find a suitable person for having insolvency services and the principal- agent relationship exists between the insolvency solicitor and the debt holders. The solicitor is accountable to debt holders and should act in the best interest of their principal. There is a relationship of trust between them still the debt holders should keep an eye on the work of their agent.

by: Johnson King

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