Pure Legal was put into administration by secured creditors owed £6.4m

Pure administration: Too many barriers to trading through

Two of the Pure Business Group’s main lenders placed the company into administration earlier this month – and they are likely to receive the £6.4m they are owed – it has emerged.

Regulated law firm Pure Legal was the principal trading entity of the claims group, eight of whose constituent businesses were put into administration, and has a book value of £56m, according to the newly published report of joint administrators Kroll.

It explained that Novitas historically provided revolving credit facilities to Pure Legal and Pure Legal Costs Consultants. It is currently owned more than £1.8m.

In October 2020, in order to provide ongoing liquidity during the pandemic, Close Invoice Finance – part of merchant bank Close Brothers – provided Pure with a £4.6m Coronavirus Business Interruption Loan Scheme loan.

The other secured lender is Perspective Investment Fund, which since 2017 had advanced Pure £6.1m. All three secured lenders should be repaid in full, Kroll said.

The administrators reported that, in May, Novitas and Close issued reservation of rights letter in respect of breaches of their facilities.

In June, Novitas instructed Kroll to conduct a material outsourcing report and also monitor the response to alleged breaches of the service level agreement between Novitas and Pure Claims Support Services, the company that vetted claims and then managed funding and insurance for them.

This led on 14 and 15 October to formal demands for repayment of £6.4m. On 20 October, with the demands unsatisfied, Novitas and Close applied to put the companies into administration.

The order was made on 2 November – putting more than 200 staff out of work – after Pure’s efforts to secure other funding to pay off the debts failed. It opposed the administration.

The report said Perspective was initially opposed too but by the time of the court hearing “no longer contended that the joint administrators’ strategy was flawed”.

Kroll said it had considered whether to allow Pure to trade in administration whilst a purchaser was sought, but identified “substantial barriers” to doing so.

These focused on the risks that the dual qualified solicitor and insolvency practitioner who would have had to lead the administration would have faced. There would also be a lack of funding.

As at 30 June, Pure Legal was managing over 28,000 cases in its own name and a further 2,657 through an external panel of agency solicitors, which will continue to handle those claims.

The other cases have been distributed through Recovery First, which aims to protect 100% of the recoverable value of work in progress, save for its fee, calculated “broadly” as 15% of what is realised.

Manchester firm Clear Law has taken on mortgage claims related to misselling, miscalculation and undisclosed commissions, while SSB Group in Sheffield has also taken some mortgage misselling cases alongside Pure’s cavity wall claims.

Warrington firm Hayes Connor and Keller Lenkner UK in London have taken on Pure’s data breach cases.

Pure Legal’s work in progress has a book value of £46m and Kroll expects to realise around £30m. There are also disbursements worth £8.7m.

As well as the secured creditors, there are two preferential creditors – staff owed around £11,000 and HM Revenue & Customs, owed £675,000 – while known secured creditors are owed £10.8m, £8.4m of which relate to intercompany loans.

After-the-event insurer Box Legal is by far the biggest unsecured creditor to date, owed nearly £1.2m.

Kroll said it anticipated there would be a distribution to unsecured creditors but could not yet say how much.

Part of any surplus will flow to certain group companies via the intercompany balances. Kroll said it was “in the process of reconciling intercompany balances to understand the ultimate flow of funds through the group”.

It appears that not all the group companies will fare so well, however. For example, Pure Business Group, the holding company, owes over £3m to preferential creditors, mainly HM Revenue & Customs, plus £1m to unsecured creditors, and Kroll said it did not currently look like it would be able to pay a dividend to them.

Kroll’s own fees for the administration are expected to be around £1.3m, with various other costs, mainly legal fees for Leonard Curtis and DLA Piper, set to be about £678,000.

Only Pure Legal Costs Consultants and the other regulated law firm in the group, Pure Advocacy and Litigation, were not part of the administration and they continue to trade.

    Readers Comments

  • Mario P says:

    Hello, I’m seeking advise please. I have a case open with Pure Legal for being affected by a Data Breach incident in May 2020, it was a no win no fee agreement. Pure Legal transferred my file to another solicitors firm Keller Lenkner under the same agreement and according to them I will have to pay outsanding fees to Pure Legal in case I don’t want to keep my case open.
    It’s been a long time now and I honestly just want to close that process and Pure Legal is not giving me any response, so I’m abut worried if I don’t keep the process with Keller Lenner I will have to pay fees to Pure Legal

    Thank in advance for your advise

  • r pratt says:

    i am awaiting contact that pure legal are doing my claim please help

  • Z n ratman says:

    This law form tooo forever but now I’m left in a pickle they did a poor job of updating me on my files now I’m so confused on how to proceeed

  • Tapas Chatterjee says:

    Pure Legal had my 2 cases one is misselling and another one is mis calculations for a very long time and they had secured almost £30k from Novitas under my name even though I do not have to pay back the debt. I had 2 letters from KROLL saying that Clear Law will take my cases but I can not get in touch with them and have no idea when they will get in touch with me either? So, Clear Law, can you please get in touch with me at your earliest convenience?

  • Juanita Javier says:

    I came to find out that Pure Legal don’t exist anymore and that Clear Law will take over the cases (misspelling,miscalculation of past mortgages) which I have filed more than 2 years ago. Please can anyone get in touch with me in this regard?

  • Rosalyn bushby says:

    Im waiting for pure claim to get intouch eiyh my missselling claim

  • Kelly Ball says:

    Hi I had a claim going through with pure legal. I have been trying to make contact with them to no avail. Does anyone know who I contact now.

  • suzannemaevans@yahoo.co.uk says:

    I have tried to call pure legal they do not reply regarding an ongoing case

  • Sharon Stuart says:

    Still waiting to hear progress of my claim. Got a letter from KROLL dated 16th November 2021 saying Clear Law had taken over my case and not heard anything since. Thank you

  • Julie Kearton says:

    I had a claim with Trusted Mortgage Claims who passed my claim to Pure Legal. I assume the case has been passed to you but I cannot get any response.

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