News
Double pledging risk exposed by MFS collapse; Lenders turn on advisers to recover losses
Exclusive UK insolvency news, trends and legal updates
Recent Articles
Kelly Rothwell and Fiona Henderson of CMS examine how the collapse of Market Financial Solutions, amid allegations of fraud and double pledging of collateral, highlights structural vulnerabilities in asset-based lending, particularly where equitable assignments and lighter-touch private credit underwriting prevail, and underscores the need for tighter verification, monitoring, and enforcement practices to mitigate the risk of competing claims over the same assets, in MFS collapse and the double pledging risk.
Caroline Brown of Burges Salmon explains that, as enforcement in distressed lending increasingly exposes overvaluations, title defects, and monitoring failures, lenders are turning to professional negligence claims against advisers as a key recovery tool, with early investigation, expert evidence, and prompt action critical to maximising recoveries and preserving claims within limitation periods, in Recovery of losses in a distress scenario: Professional Negligence claims.
Alexandra Gee, Rob Holloway and Anna Bevan-Jones of Eversheds Sutherland summarise a recent case where the High Court confirmed section 234 of the Insolvency Act 1986 does not provide a shortcut for office-holders to recover possession from trespassers, requiring instead that they pursue standard possession proceedings under CPR Part 55 in the company’s name, in Lawbite: Insolvency Act: no fast track to possession from trespassers.
Nick Moser and Louise Jennings of Taylor Wessing underscore that business rates continue to accrue post-CVA where a lease endures, with the High Court rejecting arguments that practical inability to use the premises ends liability, in Jigsaw's CVA is no escape for business rates says English Court.
Moves and Promotions — Week of 16 March, 2026
Tom Rayfield has joined Accuracy in London as a Restructuring Partner. Tom was previously with Alvarez & Marsal. Read more.
Brad Goodey has joined Interpath in Dublin as a Managing Director to establish and lead the Financial Restructuring team. Brad was previously with EY-Parthenon. Read more.
Nick Cusack has joined Azets in Southampton as a Director in the Restructuring & Insolvency team. Nick was previously with BABR. Read more.
Hiba Azzouz has joined Kirkland & Ellis in London as a Restructuring Paralegal.
Other News
The winners of the IPA Awards 2025 have been announced:
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Heather Dobson, Partner in Moore Barlow’s Insolvency and Restructuring team, was named Insolvency Lawyer of the Year. Read more.
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David Rubin, Partner at BTG, and Nick O'Reilly, Director at MHA, were the winners of the Outstanding Contribution to the Profession award. Read more.
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Catherine McNeill, Insolvency Practitioner at Financial Wellness Group, was named Insolvency Professional of the Year. Read more.
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Wedlake Bell was named Insolvency Team of the Year. Read more.
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Sharon Tyson, Cashier Senior Manager at Leonard Curtis, was the winner of the Unsung Heroes - Insolvency Cashiers award. Read more.
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Chelsea Burrows, Paralegal at MKB Law, was named Rising Star of the Year. Read more.
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Marta Wziatek, Junior Insolvency Administrator at AMS Group, was named Best Newcomer. Read more.
Open Positions
Tees Law is looking for a motivated Insolvency Associate Solicitor to join its dynamic Litigation team in Cambridge.
Watling Real Estate is looking for a Graduate or Recently Qualified Surveyor to join the Leeds office. More information.
Blake Morgan is looking for an Associate or Senior Associate solicitor with at least 5 years PQE in corporate and personal insolvency to work as part of the cross-office Business Support and Insolvency Team in Cardiff.
Albert Goodman is expanding its well-established and successful Insolvency team and is looking for an Insolvency Administrator or a Senior Insolvency Administrator to join it.
Wedlake Bell is recruiting for a Legal Administrator to join their award-winning Insolvency & Restructuring team (Band 1 Chambers).
RSM is looking for a Restructuring Advisory Associate in Manchester.
FRP Advisory is seeking a proactive and technically proficient Assistant Manager to join their Restructuring Advisory team.
Trowers & Hamlins is looking to recruit an Associate with transactional, advisory and contentious restructuring and insolvency experience who would join its Manchester team and work with the cross-office Insolvency team, supporting both non-contentious restructuring and insolvency litigation work.
Eversheds Sutherland is recruiting for a Newly Qualified solicitor (0-2 PQE) to join its Birmingham Restructuring team.
Good customer - bad debtor
When a Good Client Becomes a Bad Debtor: A Practical Guide for Businesses
In business, not every problem client starts that way. In fact, some of the most challenging debt recovery cases come from clients who were once reliable, consistent, and even profitable. So, what happens when a good client becomes a bad debtor—and how should you respond?
This guide explores the warning signs, causes, and practical steps you can take to protect your business while maintaining professionalism.
The Shift: From Trusted Client to Payment Risk
A “good client” typically pays on time, communicates clearly, and respects agreed terms. However, financial circumstances, internal changes, or poor cash flow management can quickly turn even the best clients into high-risk debtors.
This shift is often gradual—not immediate—making it easy to overlook early warning signs.
Early Warning Signs You Shouldn’t Ignore
Recognising the red flags early can save your business time, stress, and money. Look out for:
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Delayed payments where invoices start slipping past due dates
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Excuses or inconsistent communication about payment timelines
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Requests for extended terms without clear justification
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Partial payments becoming more frequent
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Avoidance behaviour, such as ignoring emails or calls
These signs don’t always mean bad intent—but they do signal increased risk.
Why Good Clients Become Bad Debtors
Understanding the cause can help you decide the best course of action.
1. Cash Flow Problems
Even profitable businesses can struggle with liquidity. If your client is waiting on payments themselves, your invoice may fall down their priority list.
2. Overtrading
Rapid growth without proper financial management can stretch a company too thin.
3. Internal Issues
Changes in management, staffing, or accounting systems can disrupt payment processes.
4. Economic Pressure
Wider market conditions—such as inflation or downturns—can impact your client’s ability to pay on time.
What You Should Do Next
When a reliable client starts missing payments, your response should be measured but firm.
1. Communicate Early
Reach out as soon as a payment is overdue. Keep the tone professional and assume good intent initially.
2. Review Your Terms
Check your contract or agreement. Are your payment terms clear? Are there penalties or interest clauses?
3. Set Clear Expectations
If delays continue, establish firm deadlines and put everything in writing.
4. Offer Structured Solutions
Sometimes a payment plan can recover the debt while preserving the relationship.
5. Know When to Escalate
If communication breaks down or promises are repeatedly broken, it may be time to involve a Debt Collection Agency (DCA).
The Role of a Debt Recovery Company
A professional debt collector can act as a neutral third party, helping to:
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Recover outstanding debts efficiently
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Maintain a level of professionalism and compliance
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Reduce the administrative burden on your business
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Preserve your reputation while enforcing payment
Importantly, early intervention often leads to better recovery outcomes.
Protecting Your Business Moving Forward
To reduce the risk of future issues:
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Conduct credit checks before onboarding new clients
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Set clear payment terms from the outset
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Invoice promptly and consistently
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Monitor accounts regularly
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Act quickly on overdue payments
Prevention is always more cost-effective than recovery.
Final Thoughts
A good client turning into a bad debtor is never ideal—but it’s not uncommon. The key is to act early, stay professional, and use the right tools and support when needed.
By recognising the warning signs and responding strategically, you can protect your cash flow without unnecessarily damaging client relationships.
If your business is dealing with overdue accounts, speaking to Red Flag Specialists early can make all the difference.
When Can Directors Be Personally Liable? Understanding Misfeasance in Debt Recovery
In today’s challenging economic climate, businesses facing financial distress often leave creditors asking the same question: can company directors be held personally responsible for unpaid debts?
The answer, in certain circumstances, is yes—particularly under misfeasance rules. For debt recovery professionals, understanding how and when misfeasance applies can be a powerful tool in pursuing outstanding liabilities.
What Is Misfeasance?
Misfeasance refers to a breach of duty or misuse of company funds by a director or officer. It typically arises during insolvency proceedings, where a liquidator or creditor alleges that a director has acted improperly or unlawfully in managing company affairs.
Rather than simply poor business decisions, misfeasance involves wrongdoing, such as:
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Misapplying company money or assets
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Breaching fiduciary duties
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Acting in bad faith or for personal gain
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Continuing to trade when insolvency was unavoidable
When proven, directors can be ordered by the court to repay, restore, or compensate the company or its creditors.
Legal Basis for Director Liability
Under insolvency law (such as the UK’s Insolvency Act 1986), directors have strict duties to act in the best interests of the company—and, when insolvency looms, in the interests of creditors.
Misfeasance claims are typically brought by:
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Liquidators
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Administrators
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Creditors (in certain circumstances)
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These claims aim to recover funds that were improperly handled or lost due to director misconduct.
Common Examples of Misfeasance
Understanding what qualifies as misfeasance helps creditors and recovery specialists identify viable claims. Common scenarios include:
1. Misuse of Company Funds
Directors using company money for personal expenses or unrelated ventures may be held personally liable.
2. Preferential Payments
Paying certain creditors (e.g., family members or connected parties) ahead of others before insolvency can trigger claims.
3. Wrongful Trading
Continuing to operate and incur debt when the director knew or should have known the company could not avoid insolvency.
4. Asset Stripping
Transferring company assets at undervalue to avoid creditor claims.
How Misfeasance Supports Debt Recovery
For a debt recovery company, misfeasance claims can open alternative routes to recover funds—especially when the company itself has insufficient assets.
Key advantages include:
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Access to personal assets of directors
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Increased recovery prospects in insolvent cases
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Legal leverage in negotiations and settlements
By identifying misconduct early, recovery professionals can work alongside insolvency practitioners to build strong claims.
Proving Misfeasance: What’s Required?
To succeed in a misfeasance claim, it must be shown that:
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The director owed duties to the company
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Those duties were breached
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The breach caused financial loss
Evidence may include:
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Financial records and bank statements
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Director communications
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Transaction histories
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Insolvency reports
A thorough forensic investigation is often essential.
Director Defences
Directors may defend misfeasance claims by demonstrating:
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They acted honestly and reasonably
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They relied on professional advice
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They took steps to minimise creditor losses
However, ignorance or inaction is rarely a strong defence—particularly where clear warning signs existed.
Why Creditors Should Act Quickly
Timing is critical. Delays in investigating director conduct can:
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Reduce available evidence
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Allow assets to be dissipated
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Limit recovery options
Early engagement with a specialist debt recovery partner ensures that potential misfeasance claims are identified and pursued efficiently.
How a Debt Recovery Company Can Help
At Red Flag Specialists, we specialise in uncovering director misconduct and maximising recovery outcomes for creditors. Our services include:
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Misfeasance investigations
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Asset tracing and recovery
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Collaboration with insolvency practitioners
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Legal action and enforcement
We combine legal expertise with commercial insight to deliver results—even in complex insolvency scenarios.
Final Thoughts
While limited liability protects directors in many cases, it is not absolute. Misfeasance rules ensure accountability where directors misuse their position or act against creditor interests.
For businesses facing unpaid debts, exploring director liability could be the key to unlocking recovery.
Need Help Recovering a Debt?
If you believe director misconduct may be involved in your case, contact our team today for a confidential consultation. We’ll assess your situation and outline the most effective debt recovery strategy.