Payment of a dividend to unsecured creditors of a collapsed personal injury firm is now ‘very unlikely’, joint administrators have said.
Insolvency experts moved in to take over the running of London firm Seth Lovis & Co Solicitors last year, resulting in all 45 fee-earning staff being made redundant. The firm had failed when a large number of CFA-funded cases – mostly cavity wall claims – failed to settle as forecast, while capital requirements increased.
A progress report published last month revealed that creditors are still waiting to find out if they will benefit from any completed work in progress completed or property sales.
The company had three secured lenders who will be first in line for any dividend: RBS is owed £3m from an overdraft facility and loan, while investment vehicles Doorway and VFS are due at least £1.5m and £3.2m respectively. All three creditors hold security over the company by way of a debenture.
Around a year ago, the administrators’ statement of affairs estimated that claims from unsecured creditors would come to £3.5m in total. So far, claims worth £3.6m have been made.
There has been no adjudication of these claims and this process is unlikely to start unless it is clear that an unsecured creditors’ dividend will be payable. No decisions have been made on that repayment, but it would appear likely unsecured creditors will receive anything.
Joint administrators from Smith & Williamson and Leonard Curtis Recovery Limited were appointed in March 2019 and have so far recovered around £1.3m from the firm’s WIP. They say they are also hopeful they can sell the firm’s former central London trading premises soon after an acceptable offer was received.
It is estimated the WIP from live matters could result in between £3.45m and £4m being recovered over 24 months. The caveat is added that most files are subject to CFAs and so the recoverability on each case is uncertain.
The report notes that the solicitor manager handling legal matters is dealing with a ‘very high volume’ of queries from former clients and other parties in respect of client account funds.
Administrators must now finalise reporting their progress to the SRA, having already completed their duty to make a confidential submission to the business secretary over the conduct of Seth Lovis directors in the three years prior to administration.
The report states that pre-administration costs came to around £287,000, of which £183,000 has been paid so far. Total costs for the administration period are estimated at £309,000, based on 1,149 hours at an hourly rate of £268.61.