Litigation Funding, LASPO and Derivatives
The world of insolvency is now open to discussion on banks malfeasance’s in misselling Derivatives that caused businesses to fail.
Although the majority of cases we investigate do not evidence this some do. For those that do there is a way forward with litigation funders now approving insolvent cases for pursing civil action to recovery money.
We have a number of cases pending in the banks own ‘irhp misselling’ voluntary review scheme where the IP has detailed that ‘but for’ the Derivatives contract that business would have avoided the insolvency process.
This process provides the banks the opportunity to settle the matter by refunding direct losses with compensatory interest;
1 Derivative and Banking costs
2 Insolvency costs
3 Forced Asset disposal costs (losses)
But what happens when it declines loss submissions ?
For a few businesses the bank has failed to recognise these direct losses so now face litigation.
A business in insolvency has the advantage (in litigation terms) to benefit from the provisions under LASPO carve out to employ suitable non-conflicted lawyers on full CFA arrangements and ATE insurance to attract litigation funding partners.
It may be that this is unnecessary litigation, the bank having failed to recognise the opportunity to provide sufficient redress voluntarily having engaged in a review, but the matter of fact is that if the bank ‘bust’ the business then it needs to take action.
Few understand the extent of work undertaken by some IPs to bring about the opportunity for settlement without litigating.
The process of the complaints to the banks often started in late 2008 and early 2009, when the businesses realised that the products forced on them were not as described in the sales process, then became an issue of constant debilitating affects until the bank positioned the business into a ‘support unit’.
Often in these support units the businesses are subject to a control method of cash flow and asset disposal that reflect the banks need to cover up the misselling and position the business owners to consider the appointment of a panel bank insolvency practitioner (IP).
Insolvency appointments with Derivatives made before the BBA announcement in November 2012 are all in need of investigation
The FSA (now FCA) advised of a moratorium on Derivative payments before any insolvency appointments ( http://www.fca.org.uk/static/pubs/other/interest-rate-swaps-2013.pdf )
This is because the first issue the bank IP has to deal with on their appointment is the breaking the Derivative contract to incur cost of hundreds of thousands and in cases millions of pounds of cost, accounted for as an increase to the banks secured Indebtedness, further distancing other creditors from any likely recovery.
This controlling position of continued abuse by the bank in circumstances where the IP details the misselling to have caused the insolvency has led to the banks rebuttal of loss claims in their own review and in one case we assist with even ignoring a demand under section 236 for information disclosure.
The inequitable process being endured by businesses that were bust by the banks will lead to litigation. As this litigation benefits from the LASPO carve out for insolvent claims if bought about by the IPs as an insolvent claim it has to be addressed.
The packaging we provide for IPs, affected Directors or Creditors who wish to bring about claims and recover money under a civil litigation includes;
- Initial no cost assessment of facts
- No cost help within the banks own irhp redress scheme
- Feasibility check with our in-house experts for litigation assessment
- Introduction to a suitable Lawyers capable of bringing about the claim on a full CFA
- Introduction to Litigation Funders and ATE providers (including insolvency costs)
- Introduction to suitable Experts to quantify any claims
- Written analysis of options to commence litigation
If you are an IP reading this or an affected business owner you only need ask yourself one question;
‘but for the irhp contract would the business have avoided the insolvency process ?’
To ensure you assess all options and provide a file that can satisfy any future investigation simply email us email@example.com or call 01482 238890 / 07713 507774