Having successfully obtained judgment for your client in a case where your firm of solicitors is acting under a conditional fee agreement (CFA), it is only natural that thoughts will turn to the firm’s own impending financial reward. But the terms of a CFA, negotiated at the outset of the case, can prove to be a barrier to their underlying commercial purpose: payment by result.

Section 262(1) of the IA 1986 provides that a debtor, creditor or nominee may apply to the court where: (a) a voluntary arrangement approved by a creditors’ meeting summoned under section 257 unfairly prejudices the interests of a creditor of the debtor, or (b) there has been some material irregularity at or in relation to such a meeting. 

The recent Chapter 11 bankruptcy filing by James River Coal was the latest reminder that mining companies continue to face unique and myriad challenges. Several factors, including the depressed global economy, tougher environmental rules and enforcement, funding and liquidity challenges, and market volatility, are causing industry-wide stress, particularly for coal companies. Trade press and pundits suggest that more mining company bankruptcies may be on the horizon.