Adviser: Bond Claims and How to Avoid Them
Each year every insolvency practitioner is required to sign an Enabling Bond, the purpose of which is to compensate creditors for losses caused by the dishonest or fraudulent acts of an office holder. Very few read the Bond Deed in any detail, and consider it a regulatory necessity worthy of little if any detailed consideration.
Those insolvency practitioners who have taken the time to read the wording of the bond will be aware that although liability for claims is underwritten by the surety (an insurance company), primary liability sits with the insolvency practitioners themselves. For that reason, a successful bond claim can result in substantial monetary claims being made against dishonest insolvency practitioners.
At a time when an unprecedented number of insolvency practitioners are facing bond claims, this Adviser considers what steps can and should be taken to avoid them.