Consumer claims firm went bust owing litigation funders £200m

Sheffield United: SSB adverts still being shown on Boxing Day

Consumer claims firm SSB Law went into administration earlier this month owing six litigation funders a total of £200m, it has emerged.

The report of its joint administrators said that, although it had nearly 43,000 cases on its books, this was not enough for an “overhead cost base” geared towards greater volumes.

Almost 200 staff were made redundant at the Sheffield-based firm, formerly known as Simpson Sissons & Brooke.

The statement of proposals from FRP said “challenges” in its portfolio of cavity wall insulation (CWI) claims also damaged SSB’s cash flow. This led to “pressure on case progression, settlements and adverse costs orders”, not all of which was recoverable through after-the-event insurance.

Further problems were adverse Court of Appeal decisions in relation to Plevin claims, “leading to a general slowdown in progression of the portfolio”, and the end of referrals and replacement claims from a key work referrer due to “substantial arrears”.

Plevin claims are named after the 2014 Supreme Court case that allowed consumers to recover premiums paid in respect of payment protection insurance policies on the basis of undisclosed commissions.

Some 37,000 of SSB’s active caseload were Plevin claims, with the rest made up of PCP (mis-sold car finance), CWI, personal injury and Japanese knotweed claims.

Opportunity SA was SSB’s biggest funder, providing £42m for CWI claims and is owed a further £28m in accrued interest. It has a registered charge and the quantum of the security is being calculated. The files have been transferred to Manchester firm JMR Solicitors.

Katch Fund Solutions provided both disbursement funding and working capital. It was owed £63m, including £16m in interest, and had the benefit of three debentures.

Katch did a deal with the administrators to buy the cases its money was funding. The offer was split between a £1 credit bid up to the value of its secured debt and cash of £726,000, part of which was used to pay off the £181,000 owed to HSBC to pay off a Coronavirus Business Interruption Loan Scheme loan.

Unusually, Katch has also agreed to fund the joint administrators’ fees.

The non-issued Plevin cases were transferred to London litigation boutique Harcus Parker, while Manchester firm Consumer Rights Solicitors has taken on the issued Plevin and the PCP cases.

Catalur Capital was owed £23m (including £5m in interest) against Plevin cases. They were transferred pre-administration to Altrincham firm Cheval Legal.

Cheval Legal has also taken on the 3,000 Plevin cases against which AFS advanced £18m. It was owed a further £3m in interest.

Duologi is owed £5.5m, split equally between capital and interest, to fund CWI and a small number of Japanese knotweed cases. CBIM is owed £9m (£5m in funding, £4m interest) for CWI cases it backed. The report does not provide any more detail on these two.

Unfunded cases have been distributed by Recovery First to its panel. SSB’s wills and probate files – it held around 1,000 wills, deeds and powers of attorney – have been transferred to Octopus Legacy in return for 10% of any net proceeds in the next two years.

Octopus Legacy – formerly known as Guardian Angel – is part of the Octopus Group, which also recently bought divorce service amicable.

FRP said that SSB had been in talks with a potential acquiror, which would have injected both capital and more cases. After these broke down, it was brought in last September to conduct a short-term cash flow review and options analysis. This concluded that a solvent solution would not be possible.

An accelerated sale process received six offers but only Katch’s was accepted. The rest either did not contain funding or upfront funding and were for not more than £100,000, “resulting in no guarantee that there would be sufficient funds for the administration and wind down”.

The joint administrators forecast that unsecured creditors – who in total are owed £142m – would not receive anything from the process, nor would HM Revenue & Customs, which is owed £671,000.

The £142m is made up mainly of the funders (except Katch), owed £135m, with disbursement creditors of £3m, trade creditors of £2.7m and finance companies £601,000.

Among the trade creditors are chambers Ropewalk (owed £249,000), Clerksroom (£175,000), Selborne Chambers (£128,000) 7KBW (£61,000) and 42BR (£42,000), as well as Premex (£881,000), Mobile Doctors (£131,000) and National Accident Helpline (£139,000).

Sheffield United FC is owed £97,000 – adverts for SSB were still being shown on the scoreboard during the club’s game on Boxing Day.

Cheval Legal was set up in 2020 to handle Plevin claims. In September, we reported that the High Court had ordered it not to use fees from a joint venture that was the subject of a dispute.

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