A law firm investor has announced a new package of funding to help a personal injury firm out of its voluntary creditors arrangement.
Doorway Capital said the undisclosed cash injection had enabled St Helens firm P R Scully & Co to emerge from the partnership voluntary arrangement.
The funder acquired national firm Simpson Millar last year as part of a pre-pack administration and has pledged to spend £50m on marketing, technology and recruitment.
Doorway said its latest investment has also secured the future of P R Scully and given it a platform to expand. The PVA is a formal arrangement between creditors and partnership allowing a proportion of debt to be paid back.
Paddy Scully, managing partner of P R Scully & Co, said: ‘We have worked hard to achieve a successful conclusion to our partnership voluntary arrangement. Gaining the support and trust of funders is incredibly challenging when operating in the PI market given the legislative changes.’
She added: ‘Although we are a small team of 14 people, with Doorway’s contribution we hope to steadily grow the firm over the next three years, continuing to drive our business forward.’
Steve Din, founder of Doorway Capital and previously with Morgan Stanley, said his company had stepped in to help firms which many banks and financial institutions would otherwise avoid.
‘We are operating in a changing market, and with change comes innovation,’ he said. ‘Doorway offers innovative packages to firms, such as P R Scully, to invest in their future, despite the wider landscape, enabling constructive and positive change.’
Doorway has also begun to buy firms’ disbursement books outright, freeing up funds that can be invested in more profitable pursuits or returned to equity partners.
Din said other capital-intensive businesses, such as aircraft and car manufacturers and mobile phone network providers, have improved the efficiency of their balance sheet by disposing of capital assets.
‘Until now, this hasn’t been an option law firms have considered, but we expect this to be an attractive way for firms to free up much-needed capital,’ he added. He said that litigation practices have often made payments of disbursements on behalf of clients while being forced to borrow at high interest rates.