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14

SUMMER 2014

EECC PRAGUE

EECC celebrates its 10thconference in PragueDr. Carlos Mack reports on the 10th event for the Eastern European Countries’ Committee

DR. CARLOS MACKLead Chair of the EasternEuropean Countries’ Committee

The 10th Anniversaryconference of theEastern EuropeanCountries’ Committee washeld in the picturesquecapital of the CzechRepublic, Prague. This very successfulconference took place on Fridayof April 11, 2014 and it waspreceded by a networking dinneron Thursday evening in a localrestaurant overlooking the famousCharles Bridge. Over 100delegates from many Europeancountries attended this one dayevent, the theme of which was“Time for Change”.

We could not ask for a betterdestination for our 10thconference. Prague is truly a jewelamong world cities and a veryimportant business hub in centralEurope. It was an honour tospend a couple of spring days inthis magnificent city and take partin such a successful conference.Firstly, Catherine Ottaway,President of INSOL Europe, andmyself, as EECC Lead Chair,welcomed all participants and setgo to a very interesting anddiverse programme which wasdivided into five sessions.

Energy sectorSession 1 dealt with energy sectorchallenges and the panel ofspecialists was moderated by ErnstGiese of Giese and Partner inPrague. It gave the audience anoverview of the current energymarket and its challenges inconnection to the unpredictabilitythat can often be caused bypolitical intervention. Thequestion whether the politicalintervention in the energy sector isnecessary or not still remains.

Automotive sectorSession 2 called “Challenges forrestructuring in the AutomotiveSector - How to maintain theSupply Chain” lead by Michael J.Schachler, of Johnson ControlsAutomotive Electronics &Interiors, gave an interestinginside view into the challenges theautomotive sector is facing sincethe crisis in 2008. He pointed outthe changes individual subjects inthe automotive industry have hadto make in order to stay solventand master the crisis.

Judges’ rolesThe conference took a pause for a delicious lunch followed bySession 3. The topic of the thirdsession was the role of judges ininsolvency proceedings. Threejudges from Hungary, the CzechRepublic and the Netherlandsgave the audience an overview of the role of the judge ininsolvency proceedings in therespective countries and outlinedpotential ways of improvement in the procedure.

Case studySession 4 dealt in detail with theinsolvency proceedings of Czechlottery company Sazka, a.s. A veryinformative analysis of the wholeproceedings was provided to us bythe panel. The main reasons thatled to the insolvency proceedingsof Sazka, a.s. were introduced and the key mistakes of theproceedings were pointed out in the case study.

Bad banksThe theme of Session 5 was “Bad banks - Regional theory andpractice”. The speakers gave thedelegates an overview of reasonsand the process of becoming a‘bad bank’ including exampleswhen bad banks were identified in the past.

Lively debateAll panelists and speakers werespecialists in their fields and thisled to lively discussions after eachsession among the members ofthe panel as well as the audiencewho were keen to ask questionsand find out more on the giventopics. Even though the weatherin Prague was amazing theaudience stayed put until the verylast presentation despite it being inthe late afternoon.I concluded the day with asummary of the conference,talked about the nine precedingconferences and invited alldelegates for a drink reception tonetwork some more and discussthe just finished conference.A big thank you goes to ErnstGiese and Nigel Davies, theTechnical Committee, for settingup such an exciting content. Wewould also like to thank oursponsors for their generousfinancial support without whichsuch a conference would not bepossible. Last but not least manythanks are owed to the OrganisingCommittee for putting togetherthis great event, as well as to thetranslators.

Overall Prague was anothergreat conference and we are veryfortunate to be a part of such anoutstanding organisation. We arelooking forward to welcoming youto our next conference!

Share your views!

SUMMER 2014

15

EECC PRAGUE

Ernst Giese gets the first session underwayThe panels took questions from the audience

The attentive audience enjoyed a varied programme

Catherine Ottaway introduces the conference

“EVEN THOUGH THE WEATHER IN PRAGUE WAS AMAZING THEAUDIENCE STAYED PUT UNTIL THE VERY LAST PRESENTATION”

I T & FRAUD

IT & Fraud:

The Golden Hour

David Ingram and Carmel King list the important steps to take at the very beginning of a case where

there is a suspicion of fraud and dishonesty of the directors

The “golden hour” is

that brief period of

time following a

serious accident in which the

outcome for a victim of that

accident will depend on what

happens in that first hour.

Likewise, the first actions

taken by a liquidator can

dictate the outcome of

the case. This article is written from the

viewpoint of a provisional

liquidator - a liquidator appointed

by the Court on a ‘without notice

application’ - and in the context of

English insolvency law. The

appointment of a provisional

liquidator is reserved for the

extreme cases, typically where

fraud is suspected and there is a

real risk of dissipation of assets or,

as examined here, the risk that the

company's records may go missing.

Having secured the

appropriate Court Orders, it will

be necessary to serve the Orders

on the company and its directors.

It is vital that, from the start, the

practitioner takes every possible

step to reduce the risk of further

dissipation of company property,

including its books and records,

and sets himself up to conduct a

meaningful investigation that will

result in the recovery of

misappropriated assets.

I would advocate a three-

stage approach:

• information gathering,

• developing a strategy based

upon information gathered,

and • the implementation of

that strategy.

This approach ensures that

commercially viable cases are

conducted in a controlled manner,

progress steadily and produce the

best outcome for creditors.

Phase 1:

Information gathering

I hope to consider phases 2

(developing a strategy) and 3

(strategy implementation) in

future articles, in order to give

adequate consideration to each.

Phase 1 involves identifying,

securing and collecting available

evidence in a manner which

ensures that it is safely preserved

for analysis and future use.

The sheer volume of

electronic data in the majority of

companies is today significantly

higher than the information

committed to paper. Information

Technology (“IT”) has a crucial

role at the outset of a case: it can

be of vital assistance to the

practitioner, but without

appropriate support from an IT

professional, it can also represent

a significant risk. IT has the

potential to contribute hugely to a

long-term case strategy involving

investigation, litigation and the

recovery of assets for the benefit

of creditors.

“The Knock”

A provisional liquidation usually

involves visiting a company’s

trading address without notice, or

on very short notice, to the

directors and employees. In these

circumstances, the practitioner

needs to secure the site as quickly

as possible, having engaged a

suitably qualified digital forensic

team to accompany him.

Opportunistic fraudsters can

interfere with the process in any

number of ways: computers and

related technologies are integral

tools in the conduct of fraud.

Funds can be transferred,

correspondence and documents

can be deleted, altered or stolen,

even when the practitioner is in

the room. The practitioner should

immediately remove all suspects,

witnesses and bystanders from the

proximity of digital evidence. The

practitioner needs to ensure that

the Court Order provides

appropriate powers. He is likely to

have the authority to seize certain

items these individuals may hold,

including company mobile

phones, USB memory drives,

tablets, credit or debit cards,

security swipe cards and SD

(secure digital) cards. It can be

tempting for disgruntled

employees to try to keep small,

high-value electronic items, or

those which they think will grant

them access to the company

records at a later time.

It may be necessary to obtain

authority to seize or gain access to

additional evidence, for example

where directors have access to the

company’s online banking

facilities through apps installed on

personal phones or tablets. I am

reminded of a case where one of

my partners attended the

company’s trading address with a

digital forensic team. The director,

at one stage, excused himself to

use the lavatory. A few moments

later, the digital forensic expert

raised the alert. The director was

remotely deleting company

electronic data using a tablet,

from the lavatory. Within seconds,

the lavatory door had to be

forced, and the tablet taken from

the director.

Practitioners should obtain

information about the systems

used from employees, IT staff and

the directors. Passwords,

usernames, email addresses used

and details of the various

operating systems are very

20

SUMMER 2014

Share your views!

DAVID INGRAM

Insolvency practitioner,

Grant Thornton UK LLP, London

CARMEL KINGAdvisory,

Grant Thornton UK LLP, London

I T & FRAUD

THE ‘GOLDEN

HOUR’ IS THAT

BRIEF PERIOD OF

TIME FOLLOWING

A SERIOUS

ACCIDENT IN

WHICH THE

OUTCOME FOR A

VICTIM OF THAT

ACCIDENT WILL

DEPEND ON

WHAT HAPPENS

IN THAT FIRST

HOUR

“

”

SUMMER 2014

21

valuable. I understand that Apple

products, such as iPhones and

iPads are notoriously difficult for

forensic technicians to “crack”

when the password is unknown,

and Blackberry devices are not far

behind. This article is not

sponsored by either brand – I

hope readers will take it as a

warning not to get locked out of

valuable sources of information!

External threats

At the same time as mitigating the

on-site security risks posed by

employees, directors and third

parties, the practitioner should

pay attention to the threats that

exist off-site. Are the premises

remotely monitored by CCTV,

and if so, who has access to this

system? Usernames and

passwords should be changed as

soon as possible, as should access

codes for online banking. Cloud

computing service providers and

other third party IT providers

should be notified of the

practitioner’s appointment as soon

as possible, to restrict access to the

practitioner alone, and ensure the

continuity of service where

required. Are the computers

networked? Steps must be taken

to isolate individual stations and

any servers, preventing remote

access. However, when doing this,

special attention must be given to

preserving the integrity of these

items for later interrogation and

use as evidence in recovery

proceedings.

The practitioner’s own

communication needs whilst on-

site should be considered. It is not

a great idea to use the company’s

WiFi or network facilities if they

might be vulnerable, as this could

result in the practitioner’s own

system being compromised.