The outlook for creditors of failed personal injury firm Roberts Jackson has worsened, with nearly £40m that it owes, more than half to its private equity backer, unlikely to be paid.
The industrial disease specialist was sold to Manchester firm AWH Legal 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 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 is paying 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 £1.2m and in the best-case scenario this would eventually reach £3.5m.
Roberts Jackson had a £4.25m revolving credit facility with NatWest, secured by way of a debenture incorporating fixed and floating charges. Quantuma estimated that, at best, the bank would recover 56% of this, and at worst 42%, lower figures than earlier on in the administration.
However, the private equity firm NorthEdge Capital, which initially invested £15m in 2014, will not receive any of the £22.5m it is owed, in line with Quantuma’s earlier forecast.
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 £7.5m, and anticipated the dividend would be in the range of 3.2-4.2p in the pound.
It submitted a confidential report to the Insolvency Service last year following its statutory investigation into the conduct of Roberts Jacksons’ directors.
Quantuma is being paid £45,000 plus 3.5% of the value of the total assets realised.