The end of insolvency litigation?


One of the important areas of an Insolvency Practitioners work is investigations into an insolvent’s affairs and taking action to recover assets for the creditors where, for example, these have been put beyond the reach of creditors.  

To take action in those cases an IP has historically used the conditional fee arrangement regime to fund litigation and according to research by the University of Wolverhampton it is estimated that this has enabled approximately £480m to be recovered each year for the benefit of insolvent estates.  

In December 2015 the Government announced that it was ending the exemption that allowed certain costs to be recovered from the losing defendants in insolvency litigation despite strong campaigning by the profession.  There is concern that this will give no avenue for IPs to fund litigation against rogue Directors and will mean potentially less monies available to distribute to creditors. 

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