Exemption for insolvency proceedings to ‘Jackson reforms’ extended indefinitely

Year Published: 2015

In October of last year I wrote the blog, ‘Jackson reforms’ and insolvency litigation, to inform you about the potential impact of the end of the exemption granted to insolvency litigation from the effects of Sections 44 and 46 of LASPO (Legal Aid, Sentencing and Punishment of Offenders Act 2012). The exemption was due to expire on 1 April 2015.

Back in October, Justice Minister Shailesh Vara had said that, “while there may be a reduction in the number of cases brought where no-win, no-fee conditional fee agreements are used, overall the LASPO reforms will tackle excessive costs of litigation and the government does not propose to update the impact assessment in relation to insolvency proceedings.”

As such the insolvency profession has had little alternative but to plan for litigation after April 2015 on the basis that the exemption would end as planned.

1306 1488 Press shot Paul 11.06.13 - compressed for webI am delighted to see that pressure from the insolvency profession, led by R3, has resulted in a time honoured government U turn.

On 26 February 2015 the government made the following announcement:

“The government will delay commencing sections 44 and 46 of the LASPO Act 2012 for insolvency proceedings for the time being. Accordingly, no-win, no-fee agreements in insolvency proceedings will continue for the time being to operate on a pre-LASPO Act basis with any conditional fee agreement success fees and after the event insurance premiums remaining recoverable from the losing party. We will consider the appropriate way forward for insolvency proceedings and will set out further details later in the year.”

This is fantastic news and will allow insolvency practitioners to continue to fund insolvency litigation in the same way that they have done previously. It will also ensure that LASPO does not have the effect of becoming a ‘cheat’s charter’ by making it harder for insolvency practitioners to pursue assets dissipated by delinquent bankrupts and directors.

R3, and its president Giles Frampton, should be congratulated for the tireless work they have put in to ensuring that the government understood and acted upon the real concerns that the implementation of LASPO, in relation to insolvency proceedings, would have had.

If you would like any further information or advice on insolvency proceedings or any other litigation matters, please contact Paul Formby in our Dispute Resolution team on 0161 475 7634.

 

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