The Significance of ATE Insurance for Insolvency Practitioners

ATE Insurance, or After-the-Event Insurance, is a specialised type of insurance product that provides coverage for legal costs and expenses incurred during insolvency proceedings. This insurance empowers Insolvency Practitioners (IPs) by mitigating financial legal costs risk and enabling them to efficiently manage their clients’ insolvency cases.​

Here are some key points to understand how ATE Insurance empowers Insolvency Practitioners:

• Security for Costs: It is also unfortunately our experience that sometimes defendant lawyers use security for costs more as a weapon and pursue it in an intimidating and aggressive manner. Such behaviour is often indicative of the defendant’s desire to quickly dispose of what it (the defendant) considers to be a meritorious claim.

However, our experience has been that lawyers acting for the defendant often require further comfort to be given in order for them to be satisfied the insurer is tied into the policy and has no ability to deny cover; for instance, due to certain liabilities being excluded under the policy or certain conditions not being met by the insured.

Subject to the merits of the legal action and prospects of success at trial being assessed at the requisite level, we can provide security for a defendant’s costs in the form of an anti-avoidance clause for incorporation into the policy by way of endorsement. This essentially prevents the insurer from voiding the policy for any reason whilst reserving the insurer’s rights against the insured. 

• Liquidators Personal Liability: Insolvency proceedings can be complex and expensive. ATE Insurance helps mitigate the financial burden on Insolvency Practitioners by covering the adverse costs and own disbursements, associated with insolvency cases. This allows IPs to focus on their primary responsibilities without worrying about the financial implications and personal financial liability for costs.

• Enhanced Risk Management:ATE Insurance acts as a risk management tool. IPs can pursue legal actions, such as litigation against directors or third parties, with confidence, knowing that their adverse costs are covered. This can lead to better outcomes for creditors and stakeholders.

• Client Protection: Insolvency Practitioners often act on behalf of creditors and other stakeholders. ATE Insurance provides an added layer of protection for their clients’ interests by ensuring that the IP can pursue necessary legal actions without the fear of depleting assets due to an adverse costs order.

• Improved Creditor Outcomes:With the financial security provided by ATE Insurance, IPs can be more aggressive in pursuing recoveries, which can ultimately lead to improved outcomes for creditors and a higher chance of recovering assets.

• Flexibility: ATE Insurance can be tailored to the specific needs of each insolvency case. This flexibility allows Insolvency Practitioners to adapt the insurance coverage to match the unique circumstances of their clients and the insolvency process.

• Compliance and Regulation: ATE Insurance in Ireland is subject to regulatory oversight to ensure that it aligns with legal and ethical standards in the industry. Insolvency Practitioners can have confidence that they are operating within the bounds of the law.