Personal injury claims management company Invaro - which was handling 80,000 claims earlier this year - ceased trading last week and is going into liquidation.

Liverpool-based Invaro offered its member firms a package including the introduction of cases; the management, control and funding of disbursements; the provision of medical notes and experts' reports; and after-the-event insurance.

In a statement in March this year, Invaro, which was formed in 2002, announced that it was cutting its panel of solicitors firms from 200 to 35 to prepare for growth in its after-the-event claims handling business, not to reduce its flow of claims.

At that time, total claims stood at 80,000, said the company - a figure it intended to double by the end of this year.

Last year, Invaro set up a new company, WishSprite, aiming to give the public easy entry into the legal system - and to offer a range of non-legal services - through panel solicitors and 'bonded tradesmen'.

The brand was launched with a television advertising campaign last Christmas.

Tony Murphy, an accountant with Smith & Williamson nominated by the company to co-ordinate creditors in advance of a voluntary liquidation meeting next Tuesday, said he could not confirm how many claims are currently being dealt with through Invaro, but he believed the number to be 'substantial'.

He could not say why the company ceased trading.

He said that a rescue package was being planned by a group of investors, which proposed to ensure that all claims are progressed, but he could not reveal the names of those involved.

He added: 'Last week all 70 staff of Invaro were made redundant, but some may be brought back to assist the rescue programme.' Invaro's chairman Terry Lindon was unavailable for comment.

The announcement follows the collapse last month of Accident Advice Group, another claims management company.

It went into administration because banks and insurers got cold feet and withdrew from the market after the collapse of The Accident Group (TAG) last year (see [2004] Gazette, 10 June, 3).

Andrew Parker, strategic litigation head at London defendant insurance firm Beachcroft Wansbroughs, said: 'The judgments in the Court of Appeal in the two recent test cases involving the TAG scheme spell a number of difficulties with these business models in which extra layers of expenditure are charged to the solicitor or the client (see [2004] Gazette, 27 May, 1).

By Jeremy Fleming