Solicitors owed thousands of pounds by Key Business Finance (KBF), the legal lender that collapsed last year, will be paid back most of what they are owed.

Some 66 law firms made advance payments to KBF totalling £460,000 just before it collapsed. KBF’s administrators Ernst & Young have now estimated that these firms will get back between 75% and 85% of their advance payments.

An administrator’s progress report shows that Ernst & Young charged nearly £500,000 in fees for work done on the administration between 15 October 2008 and 14 April this year. Ernst & Young charged £210,000 for trying to sell parts of the KBF business, at a rate of £470 per hour.

Keith Lawrenson, partner at Romsey firm Bells Solicitors, one of the firms which had made advance payments to KBF, said the repayment was ‘better than nothing’.

Ernst & Young said it has begun legal proceedings against a number of KBF customers who are allegedly trying to avoid repaying outstanding loans.

As revealed by the Gazette in October last year, KBF went into administration following the collapse of its parent company, Icelandic bank Landsbanki (see [2008] Gazette, 16 October, 1). At the start of 2009, former KBF executives launched Key Business Professions, offering a similar service to KBF but supported by what they said was a more robust funding model.

Meanwhile, in a separate development, independent financing provider Syscap claims to have secured £50m in extra funds for law firm loans.