Insolvency litigation is a highly specialised area of commercial litigation, often involving claims relating to director misconduct, wrongful or fraudulent trading, transactions at an undervalue, unlawful preferences, asset recovery and breaches of fiduciary duty. Pursuing these insolvency claims successfully requires experienced insolvency practitioners, specialist legal advice and suitable litigation funding.

For insolvency practitioners, creditors and businesses dealing with an insolvent company in York and across North Yorkshire, securing the right funding solution can help improve the prospects of recovering assets. At Annecto Legal, we help clients access tailored litigation funding, ATE insurance and flexible litigation finance arrangements, enabling insolvency claims to proceed while reducing financial risk and protecting the insolvent business.

Why insolvency litigation funding matters in York

York has a diverse and active business community spanning various sectors. When a business becomes insolvent, disputes involving directors, shareholders, creditors and third parties can become complex and costly.

Pursuing insolvency claims can create substantial legal fees, including solicitors’ fees, barristers’ fees, expert witness costs and court fees. Without suitable litigation funding, potentially valuable claims may not be pursued, limiting potential recoveries for creditors and the insolvent estate.

Working with experienced litigation funders can enable insolvency practitioners to investigate and pursue claims without relying solely on the funds available within the insolvent estate. This can help claims against directors and other parties proceed while managing the financial burden, reducing the upfront cost of litigation and limiting financial risk for the legal team and those responsible for the estate.

Insolvency litigation funding options

Every insolvency case is different, so the most suitable funding arrangements will depend on the strength of the claim, anticipated legal fees, potential recovery and prospects of success. Available options can include:

Conditional Fee Agreements (CFAs) – A Conditional Fee Agreement can allow a law firm to defer some or all of its legal fees until a successful outcome is achieved. This can reduce the immediate financial burden on the insolvent estate and help strong insolvency claims proceed without significant upfront costs.

Contingency fee agreements – Under a contingency agreement, legal fees are calculated as an agreed percentage of damages or settlement recovered. This can provide greater transparency while aligning the interests of the client and legal team.

Assignment of insolvency claims – Certain insolvency claims may be assigned to third-party purchasers in return for a upfront payment or a share of any future recovery. This can generate immediate value for the insolvent estate while transferring much of the litigation risk.

After the event insurance – ATE insurance can protect claimants against adverse costs orders if a claim is unsuccessful. When combined with other funding solutions, ATE insurance can help insolvency practitioners pursue claims while limiting financial exposure.

Third party litigation funding – Professional litigation funders can provide specialist litigation finance through structured funding agreements, typically in return for a share of a successful recovery. Funding may cover solicitors’ fees, counsel’s fees, expert reports, court fees and other litigation costs. This can allow significant insolvency litigation to proceed even where the insolvent business has limited resources.

Choosing the right funding strategy

Selecting appropriate funding arrangements requires careful consideration of the merits of the claim, anticipated legal fees, potential recovery and the commercial objectives of the insolvent business.

Some cases may be suitable for a Conditional Fee Agreement supported by ATE insurance, while larger or more complex insolvency claims may benefit from specialist litigation funding provided by experienced litigation funders. Depending on the circumstances, funding may also be available on a recourse basis, allowing the structure to reflect the specific risks and potential recovery associated with the claim.

Understanding the litigation funding offers available at an early stage can help insolvency practitioners and their legal team make informed decisions about how best to proceed while protecting the insolvent estate and managing financial risk.

How Annecto Legal can help

Annecto Legal works with insolvency practitioners, creditors and law firms throughout York to secure specialist insolvency litigation funding and insurance for a wide range of claims.

We assess the merits of each case, advise on potential funding arrangements and work with litigation funders to obtain competitive litigation finance solutions tailored to the circumstances of each claim. We can also arrange comprehensive ATE insurance to help protect clients against adverse costs and reduce financial risk throughout the litigation process.

By helping to reduce upfront cost, manage legal fees, negotiate suitable funding arrangements and protect the insolvent estate, Annecto Legal supports clients pursuing insolvency claims and other forms of insolvency litigation in York and across North Yorkshire.