In the wake of last week’s General Election result, the Midlands branch of insolvency trade body R3 is calling on the new Conservative Government to secure the future of ‘no win, no fee’ funding for the profession.
R3 believes such would protect millions of pounds of creditors’ money each year.
According to R3 research, the reform - which would require a permanent exemption for insolvency litigation from the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act - could keep up to £160 million out of the hands of fraudulent or negligent directors or third parties each year.
Richard Philpott, partner at KPMG in Birmingham and chairman of R3 Midlands, which has long campaigned for the legal changes, said: “Although a temporary LASPO Act exemption was granted to insolvency practitioners in February of this year, our profession now needs a permanent assurance that we can use ‘no-win, no-fee’ funding arrangements to pursue directors and third parties for creditors’ money.
“If the exemption were to be removed – and there is still a likelihood that this may happen - such court cases would be uneconomical.
“It would also be a massive blow in the fight against business fraud and malpractice and would place smaller creditors at a significant disadvantage when battling against those determined to withhold money from them.”