Asset Tracing and Dispute Resolution Strategy

As businesses wrestle with rising inflation, market volatility and the aftereffects of the pandemic, the risk of contract disputes, fraud, and the collapse of creditors increases. Many businesses and investors turn to the courts to pursue recovery. While many aspects of a legal dispute remain beyond the control of the plaintiff, taking the time to locate the opposing party’s assets remains a priority. In fact, without the ability to locate and identify assets and prevent their dissipation, a plaintiff may prevail in a court case, only to find themselves empty handed.

At the outset of a litigation case, some companies overlook a critical step by failing to establish the assets in the opposing party’s control, or their recoverability. Once a plaintiff develops a detailed understanding of the opposing party’s assets, they can use that information to guide their legal strategy. For example, if the effort to trace the defendant’s assets yields insufficient assets to satisfy a judgment, it may make sense to withdraw the legal action, or not pursue it in the first place. Alternatively, if asset tracing yields results, asking the court to grant freezing orders to preserve those assets can ensure their collectability.

Asset tracing is the process of identifying, locating and recovering assets that have been hidden or transferred in an attempt to avoid liability for debts or other obligations. Asset tracing is often a complex and time-consuming process, involving extensive investigations and cross-border coordination. Asset tracing is often used in the context of divorce or marital dissolution, probate and estate litigation, asset recovery efforts following fraud or financial crime, and other commercial disputes.

Asset tracing typically begins with a careful review of all available records, including financial statements, tax returns, property records, email correspondence and other relevant documents. Once potential assets have been identified, investigators will use a variety of tools and techniques to locate hidden assets, including asset searches, interviews with witnesses and financial experts, and public records research. In some cases, asset tracing may also involve surveillance, undercover operations and other covert investigative tactics.

Successful asset tracing can result in the recovery of substantial sums of money or property. In addition, asset tracing can help to preserve relationships between parties by avoiding lengthy and expensive litigation. For these reasons, asset tracing is an important tool for businesses and investors involved in a wide range of legal disputes.

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Kalita Partners is a global special situations firm.

We advise leading companies, investors, and private individuals, navigating the most complex business situations. We assist senior leadership during their most sensitive transactions, compliance events and disputes.