Forty personal injury panel firms have been hit by the collapse of a claims management company run by a former senior employee of The Accident Group (TAG), it has emerged.

Compensation Advice - which was set up after TAG went into administration last May - was left owing more than 540,000 to 70 employees and 35 other creditors after it went into liquidation last week.

Manchester insolvency practitioners Tomlinsons is dealing with its liquidation.

Tomlinsons senior manager Jason Elliott confirmed it had been appointed as liquidator of the company on 31 March, adding that the 540,000 figure was still rising as new claims emerged.

He added: 'The liquidator's immediate objective is to ensure that the employees are paid their applicable arrears and holiday pay by the national insurance fund as quickly as possible.

In addition, the liquidator will conduct a full investigation to ascertain the full extent of the company's trading deficiency and report those findings to the company's creditors at a general meeting.'

Some 700 firms were affected last year after the collapse of TAG, when the company hit the headlines after sacking 2,500 staff by text messages.

The parties involved eventually agreed - following a two-day mediation - to apply a 25% discount to the agreed/assessed base costs in the bulk of the 200,000 cases that were left up in the air (see [2004] Gazette, 12 February, 5).

They also agreed that individual claimants would not be asked to pay the shortfall of their costs.

Paula Rohan