Asset Recovery Trends – Finance and Banking

UK: Asset Recovery Trends

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While law firms saw a huge increase in revenue as legal demand hit record highs in 2021, many businesses struggled to regain a foothold amid shifting restrictions, supply chain shortages, and more. supply and loss of income.1 Asset recovery activity continued to respond to evolving demands from creditors seeking to enforce judgments acquired before or during the pandemic.

In 2022, creditors with unpaid judgments could continue to face severe resource constraints as well as obstacles to collecting amounts owed to them, as recalcitrant debtors continue to evade enforcement. As courts reopen and countries adopt new regulations, asset recovery expertise will play a key role in creditor enforcement strategies.

Navigating sovereign immunity will prove to be a major challenge for creditors

The pandemic has led to a damaging accumulation of debt across the world. In 2020, global debt rose by 30 percentage points of GDP, the largest single-year increase since 1970.2 This increase extended to most countries and included both private and sovereign debt, the latter being much more difficult to solve. With private debt, creditors can expect the process of collecting debt from individuals and businesses, while costly and time-consuming, to be feasible. However, creditors seeking to enforce judgments against sovereign debtors face a seemingly insurmountable obstacle: sovereign immunity.

By definition, sovereign immunity, a legal doctrine that grants sovereigns and states immunity from civil or criminal suits, presents the greatest challenge to claimants in their enforcement efforts against sovereign debtors. Covid-19 and the ensuing recession have further exacerbated law enforcement by creating significant economic problems for many countries, affecting their ability to voluntarily pay their debts at the same levels as before the pandemic; leading to a greater desire for these states to litigate using defensive doctrines like sovereign immunity to increase the risk of execution for claimants; thereby reducing any potential settlement.

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