Insolvency Proceedings to be Exempt from Funding Reform

The government’s decision to extend the exemption of insolvency proceeding from the abolition of recoverability of success fees and insurance premiums until 2015 has been welcomed by leading regional law firm Moore Blatch.

Mark Osgood, head of business recovery and insolvency said it was good news for both the insolvency practitioners and unsecured creditors.

“We are pleased that the government has listened to the industry and taken on board a number of concerns,’’ said Mark.

“The key concern was the inability to recover success fees and after the event insurance premiums would drastically reduce the availability of funding of office holders, who often have little or no funds to otherwise bring such actions.’’

The decision by the Government was influenced by the fact that HM Revenue and Customs is often the biggest creditor in insolvency cases.

In making the announcement Justice Minister Jonathan Djanogly explained “Insolvency cases bring substantial revenue to the taxpayer, as well as other creditors, and encourage good business practice which can be seen as an important part of the growth agenda with wider benefits for the economy.’’

He said these features merit a delayed implementation to allow time for those involved to adjust and implement such alternative arrangements as they consider will allow these cases to continue to be pursued.

This concession will apply to proceedings brought by liquidators, administrators and trustees in bankruptcy to recover the assets of the insolvent estate.