Administrators untangling the affairs of collapsed litigation funder Woodville are investigating allegations that the company used money raised from new investors to meet promises of returns to previous investors, the latest report on the process has revealed. In its third update to investors, advisory firm Kroll also states that ‘no reliable estimate’ can yet be made of the value of Woodville’s litigation portfolio.
The administrators are also probing allegations about the possible mis-selling of insurance guarantees and a crypto-investment opportunity offered by a company controlled by Woodville’s directors in the run-up to its collapse, the report reveals.
Woodville Consultants Limited, which focused on funding car finance redress schemes, went into administration on 16 July by order of the High Court. The Pontypridd-based business is understood to have raised more than £390 million from investors. It was cited last week in a Financial Conduct Authority warning to investors in ‘loan note’ schemes.
The latest update suggests that individual investors have little to hope for from the administration. According to the report, investigations have found the arrangements relating to the litigation funding portfolio ‘more complex than initially understood’. Some funding arrangements ‘may involve multiple parties, intermediary structures, overlapping contractual documents and differing records as to the flow of funds and the basis on which amounts may be recoverable.’
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Meetings have been held with two law firms and the administrators ‘remain in active dialogue’ with others to assess next steps. The administrators are also considering developments in the wider motor finance redress landscape - and how these could affect the timing and value of recoveries. Investigations are likely to cover the FCA’s own redress scheme, which is designed to bypass claims by lawyers.
Meanwhile, the report dashes hopes that investors will be protected by ’performance bonds’ issued by Ohio-based insurer Talisman. The bonds reviewed by the administrators do not cover money owed by Woodville to investors, the report states. It adds ‘we are aware from some investors that they were led to believe these bonds were a full insurance protection for their capital.’ Further updates are promised in the next investor communication.
The administrators are also reviewing a separate venture, Kairos Litigation, set up earlier this year by Woodville directors Ann Marie Bell and Peter Legge, which sought to raise funds through a ‘tokenised loan note program’. ‘No conclusions have been reached at this stage and the joint administrators do not consider it appropriate to comment further while enquiries remain ongoing.’
Overall, ‘it remains too early to provide reliable conclusions regarding recoveries’, the administrators state.
Woodville executives have so far not responded to invitations to comment.
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