Clifford Chance

Heightened risks for liquidators in investigating and prosecuting potential claims

10 August 2017

When investigating potential claims against third parties for the purpose of enlarging the pool of funds available for distribution to creditors, prior to the commencement of proceedings, it is incumbent upon liquidators to satisfy themselves that these claims have reasonable prospects of success. However, whilst appreciating the extent of the due diligence required is often extensive (including, in many cases, the seeking of independent legal and/or expert advice, as well as litigation funding), liquidators must ensure that they do not act in a dilatory fashion in investigating and prosecuting potential claims. Delay may have disastrous consequences, including, as recent litigation in the Supreme Court of New South Wales has demonstrated, the dismissal of proceedings in a summary fashion at the interlocutory phase.

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