Government Performs U-Turn on Jackson Reforms for Companies in Insolvency
It has been announced that the exemption for insolvency cases from the proposed Jackson Reforms has been extended indefinitely after the Ministry of Justice caved under the pressure from various insolvency trade bodies.
It was intended to subject Insolvency Practitioners (“IP’s”) and insolvency cases generally, to the reforms from April 2015 however The Federation of Small Businesses, the British Property Federation, the Chartered Institute of Credit Management, the ACCA, ICAS and R3 all got together sign a joint letter requesting the existing exemption, given to insolvency cases by Vince Cable, remain in place, which was granted indefinitely in February 2015.
Dodgy Directors Beware – CFA’s To Continue
The extension of the exemption from Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act, now means that it will remain simple for IP’s to take on no-win no-fee arrangements for pursuing alleged misconduct issues via court litigation. Whereas had the exemption to the reforms run out and the changes brought in by April, then IP’s would have had to gain additional insurances to cover the fees of their advisers in the event of losing their claims and will have undoubtedly led to less claims being taken against dodgy directors and third parties due to the increased costs and risks of IP’s having to foot the bill personally.
R3 Welcomes the News
Trade Body R3, being a leading organisation for business recovery professionals (such as myself) has stated that they welcome the news and have estimated that funds totalling some £160 million will be protected for creditors in recoveries.
My view is that this rare common sense approach will almost certainly lead to better returns for creditors, so it is one legislative change, of many recently, which has a real positive effect on the insolvency industry and one hopes that this is made permanent for all concerned.