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A good day for rogues and vagabonds and negligent directors as the Ministry of Justice today announced that it is ending the exemption for insolvency litigation from the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (here).

This despite the fact they have carried out NO impact assessment since they admitted they hadn’t thought about the impact on insolvency cases when legislating, and granted an exemption 2.5 years ago.

On the contrary the only independent research showed last year that £160million pa would be lost to innocent creditors should the exemption end.

The most recent research out this week shows that nearly half a BILLION pounds will be lost EACH YEAR to innocent creditors without the exemption being able to be used in insolvency litigation.

Where does the MOJ think that £500million will end up? In the hands of rogues, organised crime and terrorists. Certainly not to advance the still barely recovering economy of UK PLC.

Recent research by the University of Wolverhampton showed that this exemption helps retrieve approximately £480m owed to creditors from rogue directors and others every year, with £1bn of new claims begun in 2014.

The end of the exemption leaves a massive funding hole for insolvency litigation. Whilst some of it may be filled (at significant cost to creditors and the UK) by litigation funding, this doesn’t help the majority of claims where victims include the taxpayer.

This is not good news for UK PLC or for the compliant businesses who suffer at the hands of the reckless and the criminal.

Frances Coulson (


Standout firm known for its personal insolvency work for clients including private companies, individuals and governmental institutions. Frequently acts for insolvency practitioners, assisting with the realisation of assets, both in the UK and abroad.

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