Law firm fails in bid to stop winding-up petition advert

Cavity wall insulation: Firm had not done the work before

The High Court has refused to grant a Welsh law firm that owes a disbursement funder £2.2m an injunction to prevent the lender from advertising a winding-up petition to other creditors.

Deputy Insolvency and Companies Court Judge Curl KC said the fact that Specialist Lending Ltd, trading as Duologi, could “shift and lift” the cases for which the money was borrowed to another law firm did not prevent it from presenting the petition.

Multi-office Bridger & Co entered into a disbursement funding agreement with Duologi in March 2020 to fund cavity wall insulation claims.

Among the contractual triggers for repayment of disbursements funded by the facility was the expiry of 24 months following the first drawdown in respect of an individual claim.

In May 2023, Duologi served a statutory demand seeking around £2.2m from Bridger & Co. It presented a winding-up petition the next month, in response to which the firm sought an injunction to restrain its advertisement.

Judge Curl said the basic question was whether Duologi was entitled to have recourse against the firm for the repayment of sums that became due 24 months after they were advanced, or whether it was restricted to recoveries from the claims themselves and from after-the-event (ATE) insurance policies taken out on them.

Dismissing multiple arguments from the law firm’s director, Philip Bridger, representing the firm, he refused to grant the injunction.

The agreement gave Duologi a right, but not an obligation, to “lift and shift” the cases, Judge Curl said, and the law was clear that it had standing to present the petition, “even if it has security for the petition debt”.

He rejected an argument based on misrepresentation. Mr Bridger said cavity wall claims had been a new area for the firm and that Duologi had told him that they generally concluded within 12-15 months – the 24-month clause reflected the need for an end date.

He said he had been assured that, if cases took longer, the company would not be “heavy handed” over its funding.

Judge Curl said that, if Duologi was to be repaid only using recoveries from claims or ATE as and when they came in, “then there would be no need for an ‘end date’”.

The representation about not being heavy handed “does not say or imply, in my judgment, that the petitioner would not be entitled to have recourse against [the firm] if sums were unpaid.

“In fact, it suggests the opposite: it indicates that the petitioner would have rights of recourse but would not be heavy handed in exercising them.”

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