As readers may be aware, general changes to the ability to recover litigation funding under certain mechanisms came into general effect in 2013 pursuant to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ('LAPSO'). However, the insolvency profession has benefited from an extended period before the relevant changes will take effect on insolvency proceedings, with the relevant provisions not coming into force for the profession until April 2015.
The litigation funding arrangements affected include success fees under conditional fee agreements (or 'CFAs') and after the event or 'ATE' premiums, which have historically been used as an effective tool to fund insolvency proceedings (such as those brought by a liquidator to recover assets on insolvency).
The industry has lobbied for these funding arrangements to remain available to the insolvency profession after the proposed cut-off date of April 2015, on the basis that using such funding sources would significantly enhance the recovery of assets. However, it was reported this week that the government does not propose to review its position on the exemption, which remains due to expire in April 2015.
Reed Smith will provide updates as they become available – keep checking the blog for more information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
