Firm owed £2.8m by NHLEX group in administration

A fellow law firm is one of the biggest creditors of a legal business in administration, it has emerged.

The administrator’s progress report for NHLEX Limited, which traded as Novum Law and Hyphen Law in the south west, was published this week following the business going under in March 2024.

As is standard, the creditors are categorised into those with fixed and floating charges against any money extracted from the remains of the failed business and unsecured creditors.

The report reveals that south west firm Thrings LLP is a significant creditor following a business transfer agreement back in 2014. NHLEX had granted a fixed and floating charge debenture to Thrings as security for payments due under this agreement.

Thrings, a top 200 firm which reported a turnover of £25m in 2023/24, has lodged a claim totalling £2.8m against the NHLEX administration. The secured element is valued at £1.5m, while the unsecured claim of £1.3m is made up of unpaid debts and charges for the supply of goods and services to the defunct company.

A spokesperson for Thrings said that, while the two entities had some shareholders and directors in common, NHLEX was not a sister company or part of any Thrings group. The balance owed to Thrings was noted in its 2023/24 published accounts.

He added: ‘The report filed by the administrators of NHLEX references estimated outcomes, but it will take five or more years until we all know what the final outcome of the administration will be. We will continue to make prudent provisions over the coming years.’

In spite of the debt, Thrings enjoyed a stellar year in 2023/24, with operating profit up by 21% to almost £4m on a turnover up 11%. 

Administrators for NHLEX secured a court order in March to extend the period of administration to 2030. This resulted from complications that have arisen, as well as allowing time to realise any dividend from the work in progress ongoing at the time of administration. National firm Simpson Millar bought the assets and trading name of Novum Law in a pre-pack deal for a maximum of £2m, although based on the realised work so far, it has paid only £331,000.

Former clients of Novum Law have also indicated they want to question deductions made from their damages. In particular, administrators said one client may seek to challenge a £22,695 bill, while enquiries have been received from several solicitors acting for former clients of NHLEX firms and executors of deceased clients.

Other NHLEX creditors include HSBC, which has a secured charge amounting to £4m. Unsecured creditors have submitted 24 claims worth £1.6m, but are unlikely to receive anything. 

During the six months covered by their report, administrators have claimed £22,000 in time costs. Their total remuneration now stands at £76,000.