Blog - 01/04/2016
Restructuring & Insolvency
Insolvency Express Trials Pilot Scheme
A new Insolvency Express Trials Pilot Scheme (the Scheme) is to be brought in today, 1 April 2016 for a period of 2 years.
The Scheme will be introduced via a new Practice Direction 51P (PD) and is intended to streamline the litigation process for “simple applications” before Bankruptcy Registrars in the High Court, which are defined as: those which can be disposed of in no more than 2 days; require limited directions and disclosure; and where the costs of each party will not exceed £75,000 (excluding VAT and court fees, but including any conditional fee agreement (CFA) uplift).
If these criteria are satisfied, the applicant must clearly mark their application (which must be no longer than 15 pages) with the acronym “IET” and include statements that it is suitable for the Scheme and that the respondent is entitled to object to its use. On issue, the Court will list a directions hearing to take place no more than 45 days from the issue date with a time estimate of 30 minutes.
If the respondent objects to the use of the Scheme, they must file and serve their reasons no later than 14 days before the directions hearing, and the applicant is entitled to file and serve a reply no later than 7 days beforehand. As with the application, the content of the objection and reply is limited, in both cases to 2 sides of A4 (including the heading of the action).
At the directions hearing, the Registrar will give directions and fix the Trial date to take place between 3 and 6 months later with an agreed time estimate. The Court will also consider any objection to the use of the Scheme and can decide on its own motion whether or not the application should continue under the Scheme. The PD expressly states that the Trial date may not be vacated by consent, and an adjournment will only be granted in exceptional circumstances. The intention is for Judgment to be given at Trial or, if it must be reserved, within 4 weeks.
Importantly, the PD imposes a costs cap of £75,000 (excluding VAT and court fees but including CFA uplift), and states that this is “not intended to act as a costs target”. Additionally, and sensibly, the cost management rules contained in the Civil Procedure Rules (CPR) that apply to the majority of other types of litigation will not apply.
The costs cap of £75,000 will provide the parties with a degree of certainty regarding their costs exposure. The original draft of the PD stated a cap of £50,000, but it was considered this would have been too low and have the effect of putting parties off using the Scheme. Many practitioners are also likely to breathe a sigh of relief that the Scheme is exempt from costs management, which can add significant costs in its own right.
Overall, the Scheme is a welcome development and should speed up the litigation process for straightforward insolvency applications, for which the usual procedure under the CPR can be time consuming, protracted and costly for all parties.
If you would like to discuss the above in any more detail please feel free to contact Ali Zaidi – Head of Restructuring & Insolvency, David Fendt – Associate, or any member of our Restructuring & Insolvency Team.
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