I am sure that nobody needs reminding that the insolvency exemption appears (almost certain) to disappear as of 31 March 2016.

The impact relates to the recoverability of success fees and ATE premiums in successful litigation, which in turn impacts upon the return to creditors of the insolvent estate.

The exemption was granted in order to ensure that claims were brought, which may otherwise not have been, for the benefit of the insolvent estates.

In the short term, there is now a desperate need to review cases and consider whether it may be appropriate to issue proceedings, even if only as a “protective” measure. There may be some real benefits to this course of action; nothing focuses the mind quite like being served with proceedings.

This need not mean an inevitable rash of cases heading to Court; negotiation remains an option even after proceedings have been issued. There is a clear benefit to both parties in resolving cases during the course of the proceedings and in this regard, it may well be that directors can take advantage of Personal Guarantees UK SFC service, even if proceedings have been issued.

This service allows for us to act for the director. It is made clear that it is a “no nonsense” service; the director hears what he may not wish to hear.  The outcome is a supported Statement of Financial Circumstances and a commercially appropriate settlement offer for the IP to consider.

Post 31 March 2016, it remains to be seen whether IP’s will not take on litigation. Our own view is that although every case will have to be considered on its own merits, the change will not, in itself, be the overriding factor; net recoveries of successful litigation may fall, but are costs always recovered in full?

What the change will encourage is negotiation (with or without proceedings) with a view to reaching a suitable settlement. In this regard, the SFC service fits the bill.  By providing the director with the opportunity to take advantage of the service, a resolution can be found within a short time, maximising recoveries and reducing cost to the benefit of the insolvent estate.

For more information on PGUK’s SFC service please click here