Department
Litigation Checklist
Questions for reviewing the accounts of a litigation client — exposure, jurisdiction, judgments, contingent liabilities and disclosures.
Overall sense of profitability
What steps should be taken to quantify litigation exposure as part of a profitability or going-concern review?
Location of the entity
How does the company's jurisdiction of incorporation or primary business operations affect its exposure to litigation or enforcement risk?
Judgments against the company
Are there any outstanding or recent judgments, awards or orders against the company that could impact its financial position or restructuring options?
Material litigation / enforcement / regulatory activity
What constitutes 'material litigation' from a restructuring and disclosure standpoint under Irish law?
Net profit
How do you recommend factoring in ongoing litigation or contingent liabilities when calculating net profit for valuation or restructuring purposes?
Liquidity
How can ongoing or potential litigation impact the company's liquidity position during restructuring or insolvency?
Director / controller exposure
What are the potential personal exposure risks for directors or controllers where company litigation arises from alleged breaches of duty or mismanagement?
Owners
To what extent can shareholders be drawn into litigation involving the company, especially in cases of undercapitalisation or related-party transactions?
Where based
How does the jurisdiction where the company or its parent/subsidiaries are based affect the applicable litigation and insolvency regimes?
Regulatory engagement
Are there any ongoing or recent disputes, arbitrations or settlements that could materially impact the company's financial position or reputation?
Disputes (incl. settlements received)
Are there any ongoing, threatened or historical disputes involving the company, its directors or affiliated entities?
Solvent, profitable, part of a group?
Assess whether the company is solvent and profitable, and discuss the implications of its membership in a larger corporate group.
Currency of the figures
Assess the timeliness of the financial data — are the figures up to date, or do they reflect information older than 12 months?
What's missing?
Are there any items or aspects that appear to be missing from the financial information or disclosures?
Company's solicitors
Who are the company's solicitors, as stated in the accounts, and are they potentially acting as agents in any ongoing litigation?
Contingent liabilities
What contingent liabilities are disclosed in the notes, and what do they relate to?
What should I expect to find?
Think about what you expect to find in a business. Buildings? Employees? Sales? Goodwill? Debts? Profits?
Solvency
Is the company solvent? Are assets greater than liabilities?
Goodwill
What is the intangible asset that arises when one company acquires another and pays more than the fair value of its net identifiable assets?