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ATE insurance for insolvency practitioners: application process, fair presentation, counsel’s opinion, insurer due diligence and ongoing obligations (England and Wales)
PRACTICE NOTES
ATE insurance for insolvency practitioners: application process, fair presentation, counsel’s opinion, insurer due diligence and ongoing obligations (England and Wales)
The application process Insolvency practitioners (IPs) may approach insurers themselves, although brokers frequently assist, canvassing the market to make sure the IP secures the most favourable terms available. In most cases, IPs ask their solicitors to arrange After-the-Event (ATE) insurance on their behalf. The solicitor may either contact insurers directly or operate via a broker. The procedure entails completing a proposal form and supplying supporting material. Although each broker or insurer tends to have its own proposal document, for submissions to several insurers a single form should generally suffice, as insurers will accept equivalent versions. Central to any papers sent to insurers is ensuring underwriters can clearly follow the claim being advanced and the defences likely to be raised. They will also expect legal analysis—most often a counsel’s opinion—setting out the strength of the case. Where a formal counsel’s opinion is not
Restructuring & Insolvency
ATE insurance in insolvency litigation: coverage, premium options, timing, IDD compliance, security for costs (AAE and deeds of indemnity), multiple defendants, funding interaction and market overview
PRACTICE NOTES
ATE insurance in insolvency litigation: coverage, premium options, timing, IDD compliance, security for costs (AAE and deeds of indemnity), multiple defendants, funding interaction and market overview
What is After-the-Event insurance? In litigation, the losing side is usually ordered to meet part of the winner’s legal costs (known as adverse costs). This creates particular difficulties for insolvency practitioners (IPs) who, when pursuing claims, face potential cost exposure and, without creditors’ consent, often have little or no practical recourse to the insolvent estate to satisfy any adverse costs liability. After-the-Event (ATE) insurance exists to address this risk: if an IP advances a claim that ultimately fails, the ATE insurer will pay the adverse costs as a claim under the policy, normally up to a fixed limit and subject to the policy’s terms and conditions. What will ATE insurance cover? The primary role of ATE insurance is to insure against adverse costs. Cover can also be taken for the risk of not recovering one’s own disbursements, including expert reports, valuations and search fees. Although an
Restructuring & Insolvency
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