Page 24 - PIC e-newsletter Spring Issue 8

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INSOLVENCY
HURDLES
IN THE WORLD OF INSOLVENCY LITIGATION, BEFORE MATTERS TRULY GET OFF THE GROUND, INSOLVENCY OFFICE HOLDERS WISHING
TO BRING CLAIMS FACE A WHOLE HOST OF HURDLES THAT OTHER TYPES OF LITIGANTS OFTEN DO NOT. FOR STARTERS, AND THE WORD ‘INSOLVENCY’ REALLY IS THE CLUE HERE: THEY OFTEN HAVE NO FUNDS AVAILABLE TO ACTUALLY PAY THEIR LEGAL PROFESSIONALS TO BRING THE CLAIM. BUT EVEN IF THEY CAN OVERCOME THAT HURDLE BY OBTAINING FUNDING, THEY ARE OFTEN FACED WITH APPLICATIONS FOR SECURITY FOR COSTS THAT CAN BE DIFFICULT TO DEFEAT. ALEXANDRA WITHERS LOOKS AT TWO OF THE RECENT DECISIONS ON FUNDING INSOLVENCY LITIGATION.
Who are the funders?
Assuming that the of ce holder has been able to obtain funding, in the recently reported case of Re Hellas Telecommunications (Luxembourg) [2017] EWHC 3465 (Ch), the of ce holder was ordered to disclose both the identity of its case funders and the terms of the funding.
This was a common case of the defendant threatening to apply for security for costs (albeit the application was to be brought against the funders themselves
under CPR 25.14 rather than the of ce holder). Under CPR 25.14, such an application will be granted against the funder if the court considers
it just to make such an order; and (in this case) the funder has agreed to contribute to the claimant’s costs in return for a
share of any recovery.
In order to bring such an application, the identity of the funders had to be known and the of ce holder in this
case had refused to disclose this information. The defendants applied for a disclosure order.
When considering the application for a disclosure order, interestingly the judge relied on the court’s inherent jurisdiction to allow applications that assisted a party to make an application under CPR 25.14, so long as such an application had a realistic prospect of success.
This is an interesting development in the law of security for costs in that it confirms the court is willing to assist parties that have genuine applications to bring under CPR 25.14.
INDUSTRY EXPERTS
Partners In Costs