Accounting Rules May Spark Next Wave Of Bankruptcy Suits

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The authors discuss how certain accounting and auditing standards implemented after the Financial Crisis could affect the next wave of trustee and receiver litigation.

The disruption to the global economy that has ensued since the World Health Organization declared COVID-19 a pandemic has resulted in a sharp increase in the number of companies filing for bankruptcy. Bankruptcy and insolvency proceedings can result in litigation filed by trustees and receivers against insiders and third parties. Such lawsuits are generally initiated several months after the beginning of the bankruptcy or insolvency proceeding due to the time needed to investigate claims. For example, a wave of trustee and receiver litigation was filed in the years that followed the Financial Crisis.

In this article, authors JP Poissant and Maréma Diop discuss how certain new accounting and auditing standards implemented after the Financial Crisis could affect the expected next wave of trustee and receiver litigation.

This article was originally published by Law360 in December 2020 and was reprinted in the August 2021 issue of the AIRA Journal.


The views expressed are solely those of the authors, who are responsible for the content, and do not necessarily represent the views of Cornerstone Research.

Accounting Rules May Spark Next Wave Of Bankruptcy Suits

Authors

  • Los Angeles

Jean-Philippe Poissant

Principal

  • Los Angeles

Maréma Diop

Manager