MoJ could exclude insolvency in latest reforms

by Rachael Singh

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07 Jun 2011

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THE MINISTRY OF JUSTICE has said it might exclude insolvency proceedings in the latest reform to curb no-win, no-fee litigation cases.

Earlier this year, the government-commissioned Jackson Report was published and included plans to abolish conditional fee arrangements (CFAs), better known as no-win, no-fee deals.

Restricting these types of deals could make it more difficult for insolvency practitioners to pursue fraudulent company directors, to recover greater funds for creditors.

HMRC, as a recurring unsecured creditor, could lose millions of pounds each year from the reforms as practitioners decide against pursuing company directors through the courts.

However, a MoJ spokesman told The Guardian: "We are considering the impact of abolishing CFA recoverability in insolvency and related proceedings. These proceedings can bring substantial returns to creditors, including HMRC.

"We are therefore discussing the specific implications with a view to reaching a satisfactory conclusion."

The reforms were brought in to reduce the numbers of what are known as ambulance-chasing lawyers in litigation cases.

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