News headline.

Following on from our previous post (An end to the insolvency exemption) in what most people had considered to be an unlikely turn of events, particularly in such close proximity to the looming end of the Insolvency ‘Carve Out'(under Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO)), it was announced today in a Written Statement of the House of Commons, that the exemption was to continue.

LASPO received Royal Assent on 1 May 2012. The provisions in part 2 relating to civil litigation funding and costs came into force on 1 April 2013 and prevented the successful party to litigation from recovering a success fee and insurance premium from their opponent. However, there were two exceptions to that, the first related to mesothelioma claims and the second, time limited exemption, related to insolvency proceedings. The exemption, commonly referred to as the ‘Insolvency Carve Out’ was due to come to an end with effect from 1 April 2015.

The delay reflected the fact that insolvency cases generate substantial revenue to creditors, notably the taxpayer, and encourage good business practice. The implementation of LASPO was delayed in respect of insolvency proceedings so that those involved could ‘implement such alternative arrangements as they consider will allow these cases to continue to be pursued’. Alternative arrangements which are considered ‘workable’ are yet to be identified by those at the forefront of the insolvency industry.

Following a forceful lobbying campaign by R3 and various other interested parties, the Government confirmed today that ‘more time is needed’. No fixed period for the extension of the ‘Insolvency Carve Out’ has been prescribed. Solicitors, Insolvency Practitioners and Insurers can now let out a collective sigh of relief, and re-open their social diaries for April, which were due in large part to be written off to deal with Insurance and Conditional Fee Agreements.

This post was edited by Danielle Haston. For more information, email

Leave a Reply

Your email address will not be published. Required fields are marked *

eighteen − 9 =

This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.