Aipedia: Insolvency practitioners

AI in asset tracing and realisations

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

AI can help trace assets and value stock, IP or property in insolvencies, but the IP must judge whether a model valuation is a sound basis for a sale. A wrong valuation can lead to undervalue claims engaging PI and the bond.

Part of: AI in Insolvency practitioners

In short

AI tools can link records to trace assets and produce quick valuations of stock, IP and property. The risk is a model valuation built on thin or outdated data, accepted under time pressure, especially on a connected party sale. The Insolvency Code of Ethics requires the IP to decide whether output is appropriate (R321.1), to have expertise for the appointment (R300.5) and to evaluate specialists' work (R320.3). Undervalue claims usually fall to PI, subject to the wording, and the statutory bond may also be engaged.

How AI is used in tracing and realisations

Realising assets is central to any insolvency. AI tools can help trace assets by linking bank data, company records and documents to identify where money or property went, and can support valuations of stock, equipment, intellectual property or property using market data and comparable sales. Firms may also use AI to summarise agent reports, draft marketing particulars and compare offers.

These tools are useful for speed and breadth, but a valuation produced or heavily shaped by a model is only as good as its data and assumptions. Insolvency sales also happen under pressure: assets deteriorate, holding costs mount and buyers know the seller is an office holder. That pressure makes a quick, confident number from a tool tempting to accept.

The duties that apply

Under the Insolvency Code of Ethics:

R321.1: the IP must determine whether using an AI valuation or tracing output is appropriate for the intended purpose, such as accepting an offer.
115.1 A6: insufficient data, for example thin comparables for specialist stock or unregistered IP.
300.2 and R300.5: the IP needs appropriate expertise for each appointment, which may mean instructing a qualified valuer rather than relying on a tool.
R320.3 and R320.5: when relying on agents' or specialists' work, including their AI models, evaluate it and review the arrangement.
R130.2: records should show why a sale price was accepted.

What can go wrong

Illustrative scenario: in an administration, an AI tool values a portfolio of trade marks using generic comparables and produces a low figure. The administrator, under time pressure, accepts an offer close to that value from a party connected to the former management. A creditor later obtains a specialist valuation suggesting the marks were worth considerably more and alleges the assets were sold at an undervalue.

Other risks:

stock or equipment valued on outdated or regional data that does not fit the market;
tracing that misses assets moved through intermediaries;
marketing descriptions drafted by AI that misdescribe assets, leading to buyer disputes;
overreliance on a tool where a connected party sale makes independent advice especially important.

How PI and the bond apply to realisation losses

A claim that assets were sold at an undervalue through the IP's negligence is a classic insolvency PI exposure. PI usually responds, subject to the policy terms and excess. The statutory bond under Schedule 2 to the Insolvency Practitioners Regulations 2005 secures proper performance of the IP's functions and may be called on by those who have suffered loss, with a specific penalty sum of at least the value of the insolvent's assets, within a £5,000 to £5,000,000 range. The IPA warns in its PII guidance that failing to maintain PII may invalidate the bond, so the two need to be in place together.

Where an agent or valuer was negligent, the IP may have a recovery against them, which is another reason to keep clear records of who advised on what. See bond vs PI for AI errors.

Practical controls

Treat AI valuations as a cross-check, and instruct a qualified valuer for material or specialist assets.
Take extra care, and record reasons, on sales to connected parties.
Check the data behind any model valuation: dates, location and comparability.
Verify AI-drafted sale particulars against the assets.
Link tracing work to bank statement analysis and estimated outcome statements.

How Apex helps

Apex arranges PI for insolvency practitioners. A broker can review how your policy treats undervalue claims and how it fits with your bond. See IP PI cover explained and the insolvency practitioners hub.

Sources

Frequently asked

Can an IP rely on an AI valuation when selling assets?

An AI valuation can inform a decision, but under R321.1 the IP must decide whether it is appropriate for the purpose. For material, specialist or connected party sales, a qualified valuer's advice is usually the safer basis, and the reasons should be recorded.

Who pays if assets are sold at an undervalue?

Creditors may bring a negligence claim against the IP, which PI usually responds to subject to the wording, or look to the bond. If an agent or valuer was at fault, the IP may in turn have a claim against them.

Does AI tracing reduce the risk of missing assets?

It can widen the search, but it is limited by the data it is given and can miss assets moved through intermediaries. Combining tool output with document review and enquiries of directors remains important.

What records should I keep when an AI tool informed a sale?

Keep the tool output, the data it relied on, any independent valuation, the offers received and the reasons for accepting the price. Under R130.2 the file should let a reasonable and informed third party assess the decision, which is what a creditor, the RPB or a court will look for.

Check your PI covers how you use AI

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.