BusinessBusiness RecoveryJustice committee fails to exempt insolvency from legal reforms

Justice committee fails to exempt insolvency from legal reforms

Justice Bill Committee makes no exemptions for insolvency practitioners who are facing increased costs if they pursue fraudulent directors on behalf of creditors

INSOLVENCY PROFESSIONALS will not be exempt from current plans to clampdown on no-win no-fee claims.

Changes to legislation will mean insolvency practitioners pursuing funds from fraudulent directors on behalf of creditors will incur higher costs.

Earlier this week the Justice Bill Committee said it would not make any exemptions for practitioners despite petitioning from insolvency trade body R3.

Trade body president Frances Coulson (pictured) said: “Insolvency practitioners use ‘non-win’ ‘no-fee’ arrangements to recoup money back from ‘dodgy’ directors, who in many cases have taken money from small businesses and HM Revenue & Customs.

“R3 is calling for the government to exempt insolvency litigation, so that taxpayers are not left out of pocket.”

In an analysis by R3, consisting of 23 case studies, it found returns to creditors could reduce by as much as £3.6m – from insolvency practitioners not pursuing claims and reduced returns.

The change to the Legal Aid Sentencing and Punishment of Offender Bill will force current fees such as success and after the event insurance to be paid by the winning side, eating into returns for creditors.

Currently if an insolvency practitioner wins a case under the no-win no fee rules all fees are paid by the losing party.

An R3 spokeswoman said the insolvency trade body will continue to contest the decision and plans to take it up in the House of Lords, most likely in November.

Related Articles

Toys R Us UK and Maplin enter into administration after failing to secure buyers

Business Recovery Toys R Us UK and Maplin enter into administration after failing to secure buyers

3m Alia Shoaib, Reporter
How to avoid a Carillion collapse

Business Recovery How to avoid a Carillion collapse

4m Russell-Cooke
Carillion collapse: The week so far and industry reaction

Business Recovery Carillion collapse: The week so far and industry reaction

4m Emma Smith, Managing Editor
Carillion: PwC appointed as special managers – what happens now?

Business Recovery Carillion: PwC appointed as special managers – what happens now?

4m Emma Smith, Managing Editor
Investment firm acquires Avon Steel Company Limited

Business Recovery Investment firm acquires Avon Steel Company Limited

6m Emma Smith, Managing Editor
Manchester law firm enters into administration

Business Recovery Manchester law firm enters into administration

6m Emma Smith, Managing Editor
KPMG appoints new global head of insolvency

Business Recovery KPMG appoints new global head of insolvency

6m Emma Smith, Managing Editor
Using insolvency as a debt recovery tool

Business Recovery Using insolvency as a debt recovery tool

11m Emma Smith, Managing Editor