Jackson reforms will apply to insolvency litigation from April 2016

The government has today announced that the insolvency exception to the Jackson reforms will come to an end in April next year. This means that CFA success fees and ATE insurance premiums will no longer be recoverable in proceedings brought by liquidators, administrators, trustees in bankruptcy, and companies in liquidation or administration. The change will bring insolvency proceedings into line with other types of claim, where recoverability was abolished from April 2013.

When the Jackson reforms were implemented in April 2013, the government announced that there would be a two year delay for insolvency litigation. This was to give insolvency practitioners and other interested parties time to prepare for and adapt to the changes. The exception was due to end in April this year, but in February the government announced it would continue “for the time being” and the government would set out further details later in the year (see post). In October, Lord Justice Jackson delivered a lecture arguing that the exception should come to an end (see post).

The government's announcement does not give reasons for the change, simply saying that after further consideration the government has decided the reforms should be applied to insolvency proceedings.