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Insolvency

Question for Ministry of Justice

UIN 23889, tabled on 25 January 2016

To ask the Secretary of State for Justice, what assessment he has made of the accuracy of the findings of the report by Professor Walton, published in December 2015, that the current insolvency litigation regime returns £480 million a year to creditors, including £115 million a year to HM Revenue and Customs.

Answered on

2 February 2016

Since the passage of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012, it has always been the government’s stated intention that the exemption for insolvency cases would be temporary. Commencement of Part 2 of LASPO’s conditional fee (or ‘no win no fee’) arrangement reforms for insolvency, was announced in December and will apply from April this year. The aim of LASPO’s reforms was to control the cost of civil litigation.

Ministry of Justice Officials discussed Professor Walton’s report with him, but the Ministry of Justice did not agree with his conclusions. Officials have also met representatives of insolvency practitioners who use no win no fee arrangements to fund these cases, as well as those who fund them in other ways.