9 July 2020
Access to Justice for Insolvent Estates
Third-party funding has long been recognised as a tool enabling access to justice for impecunious claimants which would otherwise be unable to afford the significant legal costs involved in pursuing large commercial claims.
An insolvent estate is the quintessential impecunious claimant – it may have good claims against deep-pocketed defendants, but due to a lack of resource those claims may not be pursued at all or they may be settled for significantly less than their true value. Legal claims are often the most valuable assets in an insolvent estate and it benefits both creditors and insolvency practitioners to unlock and realise that value.
In 2015, following his review of litigation costs in the UK, Lord Justice Jackson noted, specifically in relation to insolvency claims and addressing the need to maintain access to justice, that: “In larger cases IPs will be able to take advantage of third party funding, which is a new arrival on the litigation scene”. In fact, litigation funding had been available to insolvency practitioners for many years prior to 2015, but even in 2020 it is still a relatively under-utilised tool in an insolvency practitioner’s armoury.
Litigation funders and insolvency practitioners can be, and are, a very happy marriage; one has access to numerous legal claims but limited funds and the other has funds to unlock and support those claims. Where third-party funding has been used by insolvency practitioners to date, the outcome has been beneficial for the funders, the insolvency practitioners – particularly in terms of fee generation – and the creditors alike.
You can read our whitepaper, Litigation Funding for Insolvent Estates here.
For further information, please contact:
Steven Savage, WoodsFord Litigation Funding
ssavage@woodsfordlf.com
