Pennies in the pound: Position has got worse for creditors
The outlook for those owed money by failed personal injury firm Roberts Jackson has worsened even more, with unsecured creditors – who are owed an estimated £13m – set to receive just 1.5p in the pound.
It is still more than private equity firm NorthEdge Capital, which invested [1] in the industrial disease specialist in 2014 and will not receive any of the £22.5m it is owed.
The firm was sold to Manchester firm AWH Legal [2] in a pre-pack in September 2018 and it later emerged that a dispute with its former after-the-event insurer was the key factor [3] in the firm becoming insolvent.
The book value of the work in progress bought by AWH was £13.4m, plus debtors, disbursements and accrued revenue totalling just over £6m.
AWH agreed to pay 10% of all profit costs and success fees from settled cases, 50% of the recoverable value of disbursements, 90% of debtors and 60% of accrued income.
The latest update from the joint administrators at Quantuma said they have so far recovered nearly £1.4m but earlier ambitions to recover as much as £3.5m have been dashed; with 300 active files remaining, likely to lead to £35,000 in recoveries, the administrators accepted AWH’s offer to pay £20,000 in full and final settlement.
Roberts Jackson had a £4.25m revolving credit facility with NatWest, secured by way of a debenture incorporating fixed and floating charges. The amount Quantuma estimated the bank would recover has been going down throughout the administration, and was now 20% – in 2020, the worst case scenario was put at 42%.
Unsecured creditors – who by law are entitled to a proportion of the proceeds where there is a creditor with a floating charge – were estimated at £13.7m, including £6m to medico-legal agencies. Counsel and other legal advisers were owed £2.4m.
Quantuma has so far received 109 claims from unsecured creditors worth £8.2m, and anticipated the dividend would be 1.5p in the pound, less than half of the meagre amount expected two years ago.
Quantuma is being paid £45,000 plus 3.5% of the value of the total assets realised.