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Government retains insolvency litigation LASPO exemption

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A new plan to extend the temporary exemption of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) in insolvency litigation cases has been announced.

The LASPO Act aims to limit excessive costs in litigation. It reconfigures after the event (ATE) insurance premiums and no-win, no-fee agreements by preventing the recovery of success fees and ATE premiums from unsuccessful parties.

If the exemption were to be lifted, success fees and after the event insurance premiums would instead be taken from any final award.

While the exemption was due to be scrapped in April 2015, the Government has recently announced its plans to retain the exclusion after coming under pressure from business groups and the insolvency profession.

Lobbyists claimed that removing the exemption would make it more difficult to pursue claims and recover assets for creditors of insolvent companies, or hold directors suspected of malpractice and fraud to account.

While the act will remain in place for the time being, further details are set to be announced later on in the year.

It remains to be seen whether the exemption will become permanent and this may be influenced by the outcome of the election, but until more details are announced, insolvency practitioners should consider initiating claims at the earliest opportunity.

For more information on the LASPO exemption, or any other insolvency litigation matter, contact James Robbins on 01772 258321. James is part of the Dispute Resolution and Insolvency team at Harrison Drury solicitors in Preston. The firm also has lawyers to deal with these matters, providing legal advice in Clitheroe, Lancaster, Garstang and Kendal.


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