Companies will be unable to recover premiums from opponents after 31 March

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Broking group JLT has urged insolvency practitioners to both file their legal cases and buy the accompanying after the event (ATE) legal expenses insurance before 1 April this year.

Under the Legal Aid, Sentencing and Punishment of Offenders act 2012 (Laspo), which came into force on 1 April 2013, firms will be unable to recover ATE premiums from their opponents if they win in insolvency cases.

Laspo had already introduced the premium recovery restriction for personal injury cases on 1 April 2013. Insolvency cases were given an exemption, but this expires on 31 March this year.

Litigation is an important tool for insolvency practitioners to recover money owed to the failed companies they are representing.

JLT said the removal of the ability to recover ATE premiums in insolvency cases “is likely to have a detrimental effect on how and indeed if at all cases are pursued”.

The broker added: “It is therefore imperative that practitioners consider their options now in order to unlock the full value of their portfolio in order to maximise creditor return.

“Whilst ATE premiums are [still] recoverable from the respondent we would implore practitioners to assess their litigation needs now.”

JLT associate Sanjay Desai told Insurance Times: “We are trying to encourage insolvency practitioners and lawyers to look at their case loads now and if they are going to pursue them, pursue them now and get in touch with us and get some insurance while they can still recover [premiums] from the other side.”

To help insolvency practitioners get to the point where they can file their suits ahead of the deadline, JLT is offering access to funding from a litigation funder. The broker says access to the funding is quicker than through usual channels because it is reviewed by JLT’s case assessment team, which comprises Desai, who is a practicing lawyer, and two underwriters. This removes a layer of approval, speeding up the process.

Desai said: “If they need to pay some money for a barrister or an expert report and make sure there is some money available to recover, the funder will give them money to get their case off the ground  and star pursuing it.”

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