Insolvency asset recovery: key tools, techniques and enforcement risks

June 2026  |  FEATURE | BANKRUPTCY & RESTRUCTURING

Financier Worldwide Magazine

June 2026 Issue

Default and insolvency risks are mounting across the world. We live in increasingly uncertain times, both economically and geopolitically. With significant uncertainty surrounding US trade and tariff policy, international relations and other factors, such as the rise of artificial intelligence, business failures are increasing across a broad range of industries.

Although the global economy is moving away from an era of hyper-globalisation toward more conditional, regional and politicised trade, a shift accelerated by pandemic-related disruption and geopolitical tensions, corporate insolvency frequently continues to trigger multiple proceedings across different jurisdictions. These proceedings are governed by distinct legal regimes, significantly increasing complexity.

Insolvency is challenging in any context, but cross-border insolvency is particularly difficult. It presents complex legal and practical issues for businesses operating internationally, raising questions around the enforceability of court judgments, recognition of proceedings and coordination among competing creditor claims. Differences between national insolvency regimes can complicate asset tracing and recovery and highlight the importance of effective tools to locate, freeze and repatriate assets held overseas.

Practical hurdles behind cross-border recoveries

Insolvency asset recovery is a critical phase of restructuring and liquidation. Its purpose is to identify, secure and realise remaining assets for the benefit of creditors. In practice, however, this process is rarely straightforward.

One of the most persistent challenges involves locating and identifying assets, particularly where operations are conducted through complex corporate structures or where property and accounts span multiple jurisdictions. By the time formal proceedings commence, financial records may be incomplete or unreliable, creating additional difficulties for insolvency practitioners attempting to determine what assets exist and who controls them. In some cases, assets may already have been transferred or disposed of prior to insolvency, requiring investigations and potential legal action to unwind transactions conducted at an undervalue or in a manner that unfairly favoured certain creditors.

Jurisdictional issues further complicate recovery efforts. Legal systems differ on enforcement rules, recognition of foreign proceedings and creditor rights, often slowing cross-border action. Even once assets are identified, disputes may arise between secured lenders, tax authorities, employees and other stakeholders over entitlement and priority, delaying distributions. Market conditions also play a role, as distressed sales can reduce realised value, particularly for specialised or illiquid assets.

Recovery efforts are frequently expensive and time consuming. Insolvent estates may lack the funding required to pursue complex investigations or litigation, making external funding or creditor support necessary. Effective asset recovery therefore demands a combination of legal expertise, financial analysis and careful coordination, especially in cross-border cases.

For Rob Child, a partner at Ashurst, the principal challenges of cross-border recovery are obtaining reliable information, navigating multiple legal systems and managing costs. “In insolvency, key information is often incomplete and the process by which an officeholder can piece together what is missing can be time consuming and costly, even more so if the information is held overseas,” he explains. “Understanding what remedies are available in different jurisdictions is also crucial, including to assist with obtaining missing information, and the range of options can vary considerably.

“Ultimately, costs are often the main driving factor – an officeholder will be unlikely to pursue an asset if the anticipated recoveries are less than the costs of identification and realisation,” he adds.

Despite the challenges, several legal instruments provide valuable assistance in cross-border insolvency. Chief among these are the United Nations Commission on International Trade Law Model Law on Cross-Border Insolvency and the European Insolvency Regulation. The Model Law forms the foundation of cross-border insolvency frameworks in many jurisdictions.

“The Model Law is an effective and valuable tool in enabling cooperation between jurisdictions, providing a structural framework for recognition and clarity around the types of relief available to a foreign insolvency officeholder,” says Mr Child. “It has clearly increased efficiencies in terms of cost and time in pursuing cross-border asset recovery. The main drawback of the Model Law is its incomplete global adoption, which compels insolvency officeholders to rely on less structured or less certain recognition procedures in jurisdictions that have not adopted it, potentially increasing recovery costs.”

Notwithstanding its benefits, the Model Law requires careful consideration. A key issue is determining a company’s centre of main interests, which typically establishes the location of the main insolvency proceedings and the lead court. Businesses must also assess how foreign proceedings will be recognised in jurisdictions where assets are held or business is conducted. Recognition can trigger protections such as temporary stays on creditor enforcement and enhanced court cooperation, preserving value but potentially limiting operational flexibility.

For organisations with multinational group structures, effective coordination across subsidiaries and legal systems is essential, particularly where multiple creditor groups and stakeholders are involved.

Technology at the frontline of asset recovery

As insolvency cases grow more complex and international, a range of technological tools has become central to asset recovery. Practitioners increasingly contend with large volumes of digital records, cross-border financial flows and sophisticated techniques used to conceal or relocate assets.

Technology is transforming investigative processes. Data analytics platforms can analyse large datasets to identify unusual patterns or transactions, while digital forensics tools allow recovery and examination of data from emails, devices and cloud-based systems. At the same time, asset-tracing software and open-source intelligence techniques assist in mapping corporate structures and monitoring asset movements across jurisdictions.

According to Mr Child, technology and data analytics are now integral to asset tracing, particularly in relation to digital assets. “Blockchain analysis tools, such as Chainalysis, can assist insolvency practitioners with respect to tracing the movement of digital assets across blockchain networks by analysing transaction histories and wallet addresses,” he says. “Open-source search tools, which scan online registers, databases and social media, have also become useful investigative tools for identifying assets.

“In the context of potential fraud, such tools can allow an insolvency officeholder to trace assets efficiently and discreetly with a view to building a case to later seize such assets,” he adds.

Digital assets pose a distinct set of challenges in insolvency, according to Mr Child. He notes that the structure of blockchain transactions can make it difficult to follow the movement and final destination of cryptocurrency without engaging specialist tracing firms, increasing both cost and time. The ease with which digital assets can be transferred across borders also creates opportunities for bad actors to move value rapidly into jurisdictions where enforcement and recognition are complex or expensive.

Where digital assets are held on unregulated exchanges, insolvency officeholders may encounter difficulties securing cooperation or accessing records detailing transactions and transferees. In addition, many digital assets are controlled by private keys, meaning that even when assets are identified, recovery may be impossible if the keyholder cannot be identified or is based in a jurisdiction where enforcement is impractical. Finally, although there is a growing tendency to recognise digital assets as property, this remains inconsistent across jurisdictions, creating legal uncertainty around ownership, trust structures and creditor priority.

Mr Child also notes that volatility creates additional difficulties. “While not strictly an issue of recovery, extreme price volatility can affect distributions where digital assets change significantly in value between the commencement of insolvency proceedings and asset realisation. Insolvency officeholders must carefully assess cost and benefit when deciding whether to pursue recovery of a volatile digital asset,” he notes.

Enforcement decisions where risk and reward collide

Identifying assets is only part of the recovery equation. Transforming those assets into realised value frequently depends on enforcement strategy and the careful management of litigation risk. In many cases, insolvency practitioners must decide not only whether an enforcement action is legally available, but also whether it represents the most commercially sensible route to recovery given cost, timing and jurisdictional uncertainty. Poorly judged enforcement can erode value, expose the estate to adverse costs and distract from more productive recovery avenues.

Cross-border enforcement presents particular risks. Even where favourable judgments or orders are obtained, practical enforcement may be slow or unpredictable, especially in jurisdictions with underdeveloped insolvency frameworks or limited experience of foreign officeholders. Interim relief, such as freezing or preservation orders, can be critical in preventing dissipation of assets, but these measures often require strong evidential foundations and careful coordination across courts. Failure to meet procedural or disclosure standards can undermine credibility and weaken future applications.

Litigation funding has become an increasingly important consideration in managing enforcement risk. Third-party funding or contingency arrangements can allow insolvency estates to pursue meritorious claims without exposing creditors to excessive downside risk. However, such arrangements must be structured transparently and aligned with the broader recovery strategy, as funder influence and return expectations can shape litigation decisions in ways that may not always maximise overall recoveries.

Enforcement success is rarely dependent on legal mechanics alone. Early strategic assessment, realistic valuation of claims and disciplined decision making are essential to ensuring that enforcement action enhances, rather than compromises, the aims of insolvency asset recovery.

Adapting to risk, regulation and global change

Insolvency asset recovery is likely to become more complex but also more sophisticated. As businesses operate across a wider range of jurisdictions and financial systems, practitioners will need to manage global asset structures, digital assets and evolving regulatory expectations. Greater cooperation between courts, regulators and insolvency professionals is expected to play an increasingly important role in improving creditor outcomes.

Mr Child anticipates and welcomes increased international cooperation between insolvency regimes in cross-border cases. He observes that, to date, such cooperation has largely developed through the adoption of instruments such as the Model Law, the JIN Guidelines on court-to-court communication and, in certain European Union jurisdictions, the Recast Insolvency Regulation. Recognition and assistance may increasingly arise through alternative arrangements, including bilateral or regional cooperation frameworks, such as those established between courts in Hong Kong and courts in Shanghai, Shenzhen and Xiamen. However, he does not foresee meaningful convergence in substantive insolvency laws, which are instead likely to diverge further as jurisdictions continue to shape regimes in line with their own domestic priorities.

Organisations should adapt their risk management strategies to address increasingly complex insolvency scenarios. Creditors should conduct thorough due diligence before investing, ensuring a clear understanding of asset location and the risks associated with enforcement and realisation in insolvency, advises Mr Child.

“Creditors should also have a clear plan for enforcing over and realising assets if necessary,” he suggests. “Where a company or its assets are located in jurisdictions regarded as practically burdensome for enforcement, investments should be structured to allow a straightforward exit, for example by locating holding companies or bank accounts in creditor-friendly jurisdictions. Finally, creditors should ensure that they maintain up-to-date information on the financial position of the company and the value of its assets.”

Successful insolvency asset recovery is about more than technical skill or legal process. It requires judgement, foresight and a willingness to act decisively in uncertain conditions. The most effective outcomes tend to arise where practitioners combine rigorous analysis with creativity, challenging assumptions about where value may lie and how it can be unlocked.

As insolvency scenarios grow more complex, preparedness will become a defining advantage. Those organisations and advisers that invest early in understanding risk, building cross-border capability and maintaining strategic flexibility will be best placed to recover value when distress emerges.

© Financier Worldwide

BY

Richard Summerfield