The bulletin board messages are heartbreaking. 'I, personally, consider my investment completely gone,' says one. 'It was was a significant portion of all my life savings and it is a massive blow to my financial situation.' 

'I am in the same vulnerable situation,' says another. 'Retired and basically invested my entire life savings (stupid I know) under the understanding that I was protected... I'm saddened by it all and it will be life changing for me.' Another is in a similar boat:  'They only have 25,000 of mine but that's my entire savings and I'm living on 800 a month.' Another recalls telling his friends to invest in litigation funding. 'I was so proud of myself because I felt like I was doing something huge for my future...'. 

Over several months, a discussion thread on Reddit set up by individuals who had invested in litigation funder Woodville through heavily-promoted 'loan notes' run a familiar course. First, the anxious questions: 'Anyone else not receive their interest payment in May?'  'Has anybody's advisor been missing in action?' 'Is there any legal actions that can be taken against advisors?'

Then the news seeps through that the company, which had promised secure double-digit returns for investments in an apparently boundless bonanza of motor finance redress claims, is heading for administration. Some, clearly not in their first language, ask what this means. 

And as disaster looms, some posters - perhaps 'sock puppets' - urge people to hang in there. 'This is a complicated topic with a lot of infos that confuse people and make them be more and more doubtful,' one sage suggests. 'They dig, see things they don't understand and assume it is bad news.' Another assures us that a $500 million financial injection into the company from a 'globally renowned household name' is just around the corner.  'We only have to run the last mile. Everybody keep calm, be patient.'

Woodville entered administration on 16 July this year. Initial investigations by administrator Kroll and transatlantic law firm Crowell & Moring found that 'the books and records reviewed to date appear unsatisfactory for a business of the company's size and are in a state of disarray'. The business is estimated to have raised more than £390 million. 

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Some things are clear, however. The purchasers of 'loan notes', at least those posting on the bulletin boards, are not what the authorities class as ‘sophisticated' or 'high net worth' investors and thus exempt from the 2021 ban on marketing of speculative illiquid securities. One poster lamented that their financial adviser 'asked me to sign that I was a high net worth investor [which] enabled his company to bypass regulations. I have only sadly just realised this as I trusted him and he came highly recommended. He operated through a Swiss company, alongside his own UK company which is also registered in the UAE.'

A recurring misconception among investors is that the law firms funded by Woodville are waiting to earn money from the FCA's redress scheme, when that goes ahead. But the whole point of the FCA scheme is that it operates without lawyers. 

Some of the sales talk that lured in these investors is still available on the web. ‘Woodville presents a compelling investment opportunity for qualified investors seeking fixed-income returns with a strong focus on capital protection and social impact,’ one adviser was assuring potential clients this year. 

Another, apparently Dubai-based, 'certified financial planner' urges. 'Don't wait to invest, invest and wait'. Woodville presents 'a simple and attractive way to make additional money without a big effort.' The adviser acknowledges the potential risk of Woodville going bankrupt. 'In that case,' he assures potential clients,  'you can go directly to the SRA (Solicitors Regulation Authority) and ask for their help'.

While investigations are still at an early stage and none of Woodville's key figures has been accused of wrongdoing, the collapse is already creating fallout beyond the personal toll on investors. The FCA last week named Woodville in a warning about the risks of investing in loan notes and mini-bonds issued by unregulated companies. The watchdog has long called on the government to review legislative loopholes such as those apparently exploited in this case. Action now looks likely.

Woodville's collapse will also play into the wider debate about regulation of litigation funding. Bigger players funding billion-pound cases over many years will argue that they are a completely different proposition to the likes of Woodville. Whether this impresses the authorities remains to be seen. But legal services seem to have a key role in the government's plan for economic growth. It does not look good for the sector's reputation to be trashed on the international stage. Again, the instinct will be to close stable doors. 

Back at the bulletin boards, some posters are falling back on the old line of shooting the messenger. A well-researched investigation into the loan notes scandal by The Times's assistant business editor is condemned as 'just sensationalist'. The paper is 'a tabloid rag', the poster opines. 'Unfortunately now other media outlets are copy and pasting the same and further propergating this story.'

As more facts about the Woodville collapse emerge, we can expect this story to be propagated very widely indeed. 

Michael Cross is the Gazette's news editor.