Executives behind the Iceland-funded legal lender that ­collapsed amid last autumn’s banking crisis have launched a new venture, offering a similar service based on what they say is a more robust funding model.

Key Business Finance (KBF), which supplied nearly 15% of law firms in England and Wales with short-term loans, fell into administration in October 2008 after its ultimate parent company, Icelandic bank Landsbanki, went bust.

Former KBF executives are now attempting to revive the business by setting up Key Business Professions (KBP), which also offers short-term loans to law firms.

Unlike KBF, the new business does not rely on a single source of funds, executives told the Gazette. KBP director Nicholas Edwards, one of KBF’s co-founders, said KBP has secured financial backing from eight national and international banks.

KBF relied on a single stream of funds from parent company Heritable Bank. Heritable itself sourced funds from Landsbanki, so when Landsbanki collapsed, KBF’s only source of funds disappeared (see [2008] Gazette, 16 October, 1).

One restructuring expert, Bruce Mackay, partner at accountants Baker Tilly, said: ‘If they have managed to raise multiple lines of credit, it would suggest that the banks have faith in their business model. Spreading risk is always the best way to go about this sort of business.’

Former KBF managing director Nick Sanders, who was in charge of KBF when it collapsed, is listed in a KBP briefing as a consultant to KBP. At present, he is understood to be assisting administrators Ernst & Young in winding down KBF. On the date of KBP’s incorporation, the sole shareholder of KBP, Laura Schofield, was listed as residing at the same Poole address as Sanders.

Former Clifford Chance lawyer Penny Stevenson has been appointed director and company secretary of KBP.

KBF’s collapse left 125 firms a total of £850,000 out of pocket after they made advance payments to KBF for loans that were never received. As creditors to KBF, they will be repaid only if administrators recover around £57m in outstanding loans.

Around 1,600 firms of the 11,000 firms in England and Wales used KBF loans to cover short-term expenses such as professional indemnity, VAT and partnership tax payments.