Litigation in Insolvency proceedings

Insolvency litigation’s exemption from the Legal Aid, Sentencing, and Punishment of Offenders Act (LAPSO) is set to end in April this year. However numerous MPs have sought to propose that Insolvency litigation should remain exempt for the time being. In addition, the president of insolvency trade body R3, Giles Frampton, has also supported the proposal and states that a change would have a detrimental effect on creditors, including small businesses and the taxpayer. Insolvency litigation is currently exempt from the ‘no-win, no-fee’ legal funding introduced by the Act in 2012. It s estimated in a recent report from the University of Wolverhampton that last year insolvency practitioners were pursuing up to £300m of creditor funds using the ‘no-won, no-fee’ funding – with around £160m being recovered and returned to creditors from delinquent directors each year. Source: Insolvency News