Conditional Fee Agreements (CFAs) and After the Event Insurance (ATE) Premiums remain recoverable in Insolvency Litigation.

The insolvency proceedings exemption to the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) was due to end on 1 April 2015. However, the Ministry of Justice has now announced that the exemption will continue until further notice meaning that success fees on CFAs and ATE premiums continue to be recoverable from the losing party on a pre-LAPSO basis.

The recent announcement represents a u-turn on the part of the government, which has come under significant pressure from trade bodies and insolvency practitioners who have argued that, without the exemption, litigation to recover monies for the benefit of creditors would be uneconomical resulting in a reduction in sums available to unsecured creditors including HMRC. The government accepted that further reflection was required on this issue and will review matters further later in the year.

It remains to be seen whether the exemption will be permanent.

For information on this or any other aspect of litigation, please contact the partner at Hunters having responsibility for your legal matters or, for new enquiries, a member of the Dispute Resolution team.