Recent legislative changes allow officeholders to decide that it is in the creditors’ best interests to monetise a claim by assigning it rather than through litigation.
Conditional fee agreements (CFAs) coupled with after the event (ATE) insurance was one the most common way of funding insolvency proceedings in England and Wales. That is, up to 6 April 2016. The recovery of success fees and ATE premiums from losing opponents for most claims was abolished from 1 April 2013 by The Legal Aid, Sentencing and Punishment of Offenders Act 2012. Insolvency proceedings were temporarily exempted from this reform but on 6 April 2016, this ‘carve out’ was brought to an end. What happens going forward remains to be seen.
In an article for International Corporate Rescue, Rocco Pirozzolo sets out the funding options now available to officeholders to litigate a claim:
- Creditor funding
- Litigation funding
- DBAs and Hybrid DBAs
- CFAs and ATE insurance
- Assignment of officeholder claims
He also considers the legal changes in more detail and how they may impact the litigation landscape.
The article appeared first in a special issue “Litigation Funding – Landmark Articles” and is reprinted with the permission of Chase Cambria Publishing, www.chasecambria.com.View all Habour views