No Win, No Fee to end for Insolvency Litigation
The Consequences of the end of ‘No Win, No Fee’ for Insolvency Litigation.
According to a press release dated today (17th December, 2015) the Ministry of Justice through Lord Faulks QC has confirmed that the ‘no win, no fee’ reforms that generally came into effect in April 2013 will now be applied to insolvency litigation proceedings. This provision will come into force in April 2016. However, the press release confirms that there will be a review of these reforms between April 2016 and April 2018.
This means that any conditional fee agreement success fees and after the event insurance premiums will no longer be recoverable from the losing party from April 2016.
This exemption existed so as to allow insolvency practitioners and other interested parties time to prepare for and adapt to the changes. However, in practice, it was used by some insolvency practitioners to unfairly pressure directors into settlement where the merits of the claim do not objectively justify payment.
It would appear to be good news for delinquent directors on the basis that office holders (to include Liquidators and Administrators) will likely find it more problematic to bring proceedings.
However, this may be the encouragement for Liquidators and Administrators to assign insolvency claims to be pursued; thus allowing that market to develop.
The Likely Consequence in the area of Insolvency Litigation
The immediate consequence of this announcement, in our view, is likely to be that insolvency practitioners with proposed insolvency claims will seek to issue them as soon as possible in 2016 and certainly before 31 March 2016 to increase potential recoveries.
If you are facing Insolvency Litigation, as Insolvency Litigation Solicitors, it is always the case that the earlier that you get in touch with us the better, because it is more likely that we can help you. This new ruling simply adds weight to the necessity to act quickly, because Insolvency Practitioners will be acting to beat the deadline.
Please contact us or call us today on 0121 200 7040 for a no obligation / no pressure chat?