Asset Tracing as a means of debt recovery in Corporate Insolvency Litigation.
12 April 2023
Introduction
In simple terms, asset tracing is the process of identifying assets through investigations for a particular purpose [without going into the details to answer questions as to who has a legal right to the assets so traced]. Asset tracing can be distinguished from asset recovery which involves the restraining, seizure, confiscating, and return of the assets traced to the rightful owner; it is an assertion of a right.
The nexus between tracing and recovery is that once the tracing exercise is successfully completed, it can then be asked what rights, if any, the claimant can, on his particular facts, assert against the assets traced. These rights can be personal, proprietary, legal, and other equitable rights depending on the subsisting facts.
According to Lord Millett in Foskett v. McKeown and Others, tracing assets is neither a claim nor a remedy. It is merely the process by which a claimant demonstrates what has happened to his property, identifies its proceeds and the persons who have handled or received them, and justifies his claim that the proceeds can properly be regarded as representing his property.
Tracing is also distinct from claiming in the following ways:
- It identifies the traceable proceeds of the claimant’s property.
- t enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim, but it does not affect or establish his claim.
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Published by
Riskhouse International