Felicity Toube

Position: Barrister
Chambers: 3-4 South Square

You’ve worked on all the leading cross-border insolvency cases. Which ones have engaged you the most?

I really enjoy legally and factually difficult cases and I’m as happy to work for a large client as for a smaller client. Recent cases of particular interest include Stanford (the first case on the Cross Border Insolvency Regulation) for the US receiver against the Antiguan liquidators. The interaction between the two sets of office holders caused a lot of difficulty.

It really made me think about how (if at all) you can get that to work. I have also been working on a number of different cases in relation to Lehman and Madoff. Lehman involves issues arising from the interaction between financial services and insolvency and also raises countless questions of construing commercial documentation that have never really been tested before. Madoff relates to the trade off between individual creditors trying to get something for themselves and the office holders trying to realise property for all. There were also some nice technical issues about the Brussels Regulation and the EC Insolvency Regulation and French shipping law which added to the fun! I’ve also been working on the Icelandic Banks. Those have mostly been issues on the commercial documentation, but also relate to demands being made by the banks for payment from potential debtors.

How has your practice been affected by the economic downturn?

Everyone thinks that I must be run off my feet! I am, but not necessarily doing what you would think. A financial collapse does two things. Firstly, it brings to the fore issues that don’t matter in solvent companies. Secondly, it reveals the frauds that were hidden in the upturn and would have continued to be hidden if there hadn’t been a downturn. As to the first, one example is the complex suites of documents, or standard form ISDA Master Agreements and Prime Brokerage Agreements. Everyone thought they knew what they meant until there was not enough money to go around. Then there are all sorts of questions as to whether the documents actually work. However, there isn’t as much litigation as you would think. Sometimes clients do not have enough money to litigate. There are a lot more settlements or restructurings. I have been kept busy, though! At the moment I’m spending quite a bit of time on the Nortel and Lehman pension litigation. As to the second result of a collapse – the frauds – Madoff was a huge fraud and Stanford is alleged to be another. But it’s the smaller ones that are now coming out of the woodwork. I think the biggest change in my practice is how fast people need advice. The turnaround on preparing for cases when I started was usually three weeks, now it is three days (or less).

Your practice has a significant international element to it, covering numerous jurisdictions. Is this typical for your chambers?

It is common in these chambers to work with numerous international jurisdictions (in particular common law). I am fortunate also to have a variety of work from a number of weird and wonderful jurisdictions. Some of the more unusual have involved issues relating to Equatorial Guinea (an alleged bribe), Latvia (service issues), Liberia (directors’ duties), Indonesia (restructuring law) and Iraq (UN sanctions and a number of other technical issues). I’ve also done a lot of work on US cross-border cases. That has been helped by holding dual UK and US citizenship, so I am bi-lingual! I’ve even appeared once in a US court by telephone.

You have recently published a book on international asset tracing in insolvency. How did you get involved in this area?

I was brought into one of the BCCI cases at an early stage in my practice. You couldn’t get much more complex asset tracing than there. The circular fund flows, the window dressing to disguise it, involving several different international companies, was on a huge scale. Since that, I have been involved in a number of other big frauds (including Palmer – the biggest timeshare fraud – where he used a huge network of companies in different jurisdictions to hide the fraud), and you really learn from the fraudsters’ ingenuity! At the moment, I am also tracing money into India. But you can never tell where the fraudsters will end up. I have even appeared twice in the family courts and twice in the criminal courts, including the Old Bailey.

What do you see as the most interesting aspects of your areas of law moving forward?

Cross-border issues are the most technically interesting and fraud the most factually interesting. Because of the international nature of many groups of companies, it is important to implement a strategy that links together formal insolvencies in many different companies. In my view, the time has come to move to the concept of group insolvencies, and not to stick to the formal separation between companies, particularly where there has been a fraud. This is not an uncontroversial view! But the time has come, at the very least, for joined up thinking on the subject – joined up insolvency, if you will. Asset tracing and cross border insolvency are where it will continue to be for the foreseeable future.

Felicity Toube was interviewed by Guy Hewetson, LPA Lega