Who we help
Insolvency Professionals
Pursue recoveries without estate risk.
- A judgment or award won
- A judgment against you
- Funder capital deployed
- Law firm fees and WIP
- Security for costs
- The opponent's costs
- Disbursements
- Own legal costs
Illustrative. The exposures a dispute can put on a balance sheet. What a policy responds to is set by its wording.
How can litigation insurance apply to insolvency professionals?
Administrators, liquidators and trustees advancing claims for the benefit of creditors. Litigation insurance may be used here to convert an open-ended downside into a more defined one, depending on policy terms and subject to underwriting. Structures, where available, are arranged case by case.
On this page2 min read
Key points
- Terms, where available, are set case by case through underwriting.
- Administrators, liquidators and trustees advancing claims for the benefit of creditors.
- Exposure can be measured across costs, capital and judgment risk together.
- Protection, where available, is arranged around the specific decision being taken, not sold as a package.
- Jurisdiction can affect how much of the exposure is costs-driven.
The exposure
Administrators, liquidators and trustees pursuing claims for creditors must weigh recoveries against the risk of losing estate assets to adverse costs.
Creditors may be unwilling to fund, and defendants often seek security for costs against insolvent claimants.
What can be protected
- Adverse costs and disbursements through ATE
- Security for costs
- Where claims are assigned or funded, the funder's deployed capital
How engagements usually run
It is often arranged early, before proceedings are issued, so that cover and funding can be presented to creditors or the court as part of the decision to litigate.
Assignment of claims to a funder is another route.
Illustrative scenario
A liquidator brings a £6m misfeasance claim against former directors. With no estate funds for costs, the liquidator arranges ATE covering £900k of adverse costs and disbursements, with the premium payable only on success, and uses it to meet the directors' security application.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
Questions worth asking first
- Do creditors support the claim?
- Would the claim be better assigned or funded?
- What will the defendant's security application require?
Frequently asked
Can a liquidator bring a claim without risking estate assets?
ATE covering adverse costs and disbursements, often with a premium payable only on success, can protect the estate. Assignment of the claim to a funder is another option.
Are insolvent claimants often ordered to give security for costs?
Security applications against insolvent companies are common, and suitably worded ATE can be offered as security.
Do creditors need to approve litigation insurance?
That depends on the insolvency process and the office-holder's powers; in practice, creditor support is often sought before significant litigation.
Can an office-holder assign a claim instead?
Yes. Assigning a claim to a funder or purchaser is an alternative to litigating with insurance, and may suit claims the estate cannot fund.
Does ATE cover the defendant's costs if the claim fails?
Yes, that is its main purpose: the insurer pays the adverse costs order up to the limit, protecting the estate.
General information only. This page is not legal, financial, investment or insurance advice. Any insurance is subject to underwriting and to the terms of the policy wording issued.
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