Insolvency and management fraud
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www.harneys.co m HARNEYS Hong Kong Insolvency and Management Fraud December 2015 Ian Mann, Harneys, Hong Kong Head of Offshore Litigation for Asia
Transcript of Insolvency and management fraud
www.harneys.com
HARNEYS Hong Kong
Insolvency and Management Fraud
December 2015
Ian Mann, Harneys, Hong KongHead of Offshore Litigation for Asia
www.harneys.com
The presenters
Ian MannPartner
• Head of Offshore Litigation, Restructuring and Insolvency Group in Asia• Specialises in insolvency, restructuring, shareholders’ disputes and contentious trusts • Co-author of the leading text book: British Virgin Islands Commercial Law, Sweet &
Maxwell, now in its third edition.
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About Harneys
• BVI, Cayman and Bermuda law (from Harneys Bermuda)• 14 offices around the world• New Harneys Bermuda office opened in September 2015• New Shanghai office opened in November 2015• More than 15 languages• 37 partners worldwide; more than 100+ qualified lawyers• 33 fee earners in Hong Kong, second largest offshore law firm in
Hong Kong and still growing• Associated corporate and fiduciary services business
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The Stages of Grieving
Shock
Denial
Blame
Anger
Uncertainty
Acceptance
Moving on
Performance or Self Esteem
Time
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Warning Signs
• No management accounts• Regulatory issues• Over spending• Overruns• Changing specification of project• People leaving• Other issues in group sapping energy• Non payment• Default
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Management Fraud
“It’s only when the tide goes out that you learn who’s been swimming naked.”
-Warren Buffet
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Management Fraud
• An increasing incidence?– Fraud – a part of the economic cycle– Speed and confidentiality– Warning signs/conduct of account
• Assets owned by other companies (particularly IP rights owned by a director leaving little in insolvency)
• Offshore companies used for no clear reason• Cheque kiting• Name/DOB inconsistencies• Inconsistent explanation (eg why the group is so complex, what assets are transferred intra-
group and suspicious funders)• Security not perfected (particularly excuses for failure)• Significant transactions
– Agents• Valuers• Solicitors
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Management Fraud
Statutory powers of examination and investigation• Private examination• Inspectors
Proceedings•Worldwide
freezing order• Enforcement
Other jurisdictions• Separate proceedings• Enforcement
• Books and records• Asset tracing• Searches• Committal for
contempt• Secure assets• Investigate• Recover
• Freezing order continued to enforcement
Phase 1Pre insolvency appointment• Focused review• Strategy with cost/benefit
analysis
Phase 2Post insolvency appointment• Secure assets• Investigate• Recover
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