No-win, no-fee suits could recover debts
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• by Kevin Swallow Hauliers owed money by rogue directors of failed companies could soon be able to sue them on a no-win/no-fee basis.
The Forensic Insolvency Recovery Service (FIRS) is a pilot scheme set up by the Insolvency Service with a team of insolvency practitioners, solicitors and enquiry agents. It will allow liquidators to take a director to court if he has abused his company's limited status for personal gain. The court could then make the director personally liable for the debts.
The FIRS scheme could change the entire liquidation process. It will be good news for hauliers who are owed money by failed companies because no financial outlay will be required to pursue debts. This process was previously funded by creditors.
The scheme will monitor 10 cases before a decision is made on introducing it nationwide. FIRS is launched as the Insolvency Service reveals that the number of disqualified directors rose 20% to a record 1,540 in the year to March 2000.
Consumer Affairs Minister Kim Howells says: "The legal action will seek to recover monies personally from those directors who have abused the system, for the benefit of those creditors affected."
• Contact Nick Miller at Kingston Smith & Partners on 020 7566 4020.