You work at a large accounting firm and have been staffed on a bankruptcy litigation matter. The bankruptcy relates to a public company. There were allegations that the financial statements were misstated and that some material information was not disclosed to the market. When that information became public, the creditors pulled the short term lines of credit and the company filed a bankruptcy petition.

The firm you have worked for will be analyzing the solvency of the company in the period prior to the disclosure of the material non-public information. The company made large transfers of value to a related entity and paid multi-million dollar bonuses to insiders. The bankruptcy trustee is seeking to void these transactions as constructively fraudulent conveyances.

1) When did the company become insolvent?

2) What kind of financial analyses will be needed to determine when the company became insolvent?

3) What the initial work steps that the team will need to perform and the evidence and information you will need to gather?