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Insolvency and April 2015 – avoid the late night essay crisis

It looks as if they will be implementing the non-recoverability of Insolvency ATE success fees in line with the advertised April 2015 deadline.

“They” being the powers that be and in whose hands we rest. Personally I am confused by the known position v. the rumours and what I think is intended by the regulations.

The most pressing point is that April 2015 is the Insolvency deadline beyond which the ATE premiums for insolvency claims will not be recoverable, of this we are all certain. If the IP cannot recover the ATE premium, as will the case from April, (and despite rumours to the contrary) for once my crystal ball is crystal clear, there will be significant reductions in the sums distributed to creditors. In our experience one of the largest creditors in bankruptcies is HRMC. Has HMG thought this one through?

Looking at the numbers when comparing the financial effect between recoverable v. non-recoverable CFA uplifts and ATE premiums the difference amount available for creditors could be as much as 50%. If this is the case many insolvency proceedings will not be financially viable with IPs unable to instigate the necessary litigation. If this is the end result, wither justice for creditors?

The Jackson report may have suggested the need for alternative funding methods for all litigation, this has yet to materialise and it is this which I think has ultimately led to the current rumours of the April deadline being removed.

We can only use the known position, and as the deadline is fast approaching, it would be a wise lawyer and IP who seek After The Event (ATE) insurance before clients become liable for the premium. If the guillotine does drop in April and cover is not in place, who will get the blame? Could there be a negligence case in the offing?

So while there is still scope to operate under the old rules, maximise the opportunity and get those applications in for our expert attention and avoid the last night essay crisis, which I am sure readers will remember without fond memories, I certainly do, Samson Agonistes being the worst experience.