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Jackson Reforms To Litigation Costs Delayed To 2015 For Insolvency Proceedings

Reforms to the rules for Conditional Fee Arrangements (“CFAs”) and After the Event Insurance (“ATE”) due to come into force in April 2013 pursuant to Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 are being delayed to 2015 for insolvency proceedings. As a result, success fees on CFAs and ATE premiums will remain recoverable from the losing party in respect of insolvency proceedings for the time being.

The government justifies the delayed implementation of the new rules preventing recovery of success fees on CFAs and ATE premiums on the grounds that insolvency proceedings bring in substantial revenue for the taxpayer and encourage good business practice. R3, the association of business recovery professionals, had lobbied to delay the changes to allow time for the industry to adjust, citing the fact that CFAs and ATE insurance allowed insolvency practitioners to pursue unscrupulous directors and debtors of failed companies when other funding was not available to pay for litigation

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