If Insolvency Practitioners are looking to enter into Conditional Fee Agreements and/or take out ATE Insurance they may need to get their skates on. Speaking at the recent 2015 Mustill Lecture in Leeds, Lord Justice Jackson has urged the government to ditch one of the final exemptions to his civil justice reforms. He has said that the exemption for insolvency proceedings should not continue.
Insolvency Practitioners will recall that in February 2015 the Ministry of Justice said it would delay dropping the exemption “for the time being”. Despite the fact that a subsequent report has found that many cases of recovery against directors of insolvent companies would not get off the ground if they were subject to the new rules, Lord Justice Jackson has described recoverability of After the Event Insurance and success fees as “an instrument of oppression, which is liable to crush Defendants who have a good defence”.
If the government take notice of Lord Justice Jackson and prevent the recoverability of success fees and After the Event Insurance, this will make it far more difficult for Insolvency Practitioners to bring claims on behalf of creditors to maximise the insolvency estate.
If Insolvency Practitioners have not yet done so, they should check all their matters where there is a prospect of bringing a claim against a third party and, where appropriate, enter into Conditional Fee Agreements and take out ATE Insurance before the exemption to the general litigation rules disappears.
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