Our regular newsletters have proved to be a very effective means of communicating with IPs, lawyers and other industry professionals. We are all having to adapt to a different work pattern in one way or another and keeping informed of rapid changes is key. So we are today issuing a short bulletin to ensure all our stakeholders know where Manolete stands amid the COVID-19 crisis.
You should have seen our short message last week stressing that Manolete is still fully operational to support the vital work of IPs and their lawyers in the insolvency industry. Where cashflow is a critical issue in progressing cases, our substantial resources are ready for your deployment.
You will have read no doubt of the Government’s decision this weekend to temporarily relax the laws on insolvency related to Wrongful Trading “to give companies breathing space and keep trading while they explore options for rescue.” Stephen Baister puts these measures in a proper historical context below
Also included here is an interesting article from Alison Kirby, who covers the Eastern Region for us. Our key messages are:
- Don’t leave things too late!
- We will always move fast to accommodate your requirements (24-hour decisions for very urgent cases).
- Whether Funding or taking an Assignment, our standard model is to pay an initial (non-refundable) amount in cash, up front and then share the net proceeds, with the Estate receiving a minimum 50%. The up front amount can make a very material financial contribution to your historic WIP - a feature the IPA has been emphasising to members in these challenging times.
- If the IP wants to simply close the liquidation and distribute to Creditors, Manolete can offer a larger one-off amount in cash. We take all the risk/reward going forward.
We have always tried to take a flexible and pragmatic approach to IPs’ requirements. In some cases we have even ended up buying properties from Bankrupt Estates to provide liquidity to the TiB and the Creditors. There is never a ‘one size fits all’ approach – please do just drop us a line
Best wishes and good health to you all.
Never Say Never
I was approached last week by a solicitor whom I know, asking what our minimum claim size is.
“Twenty thousand,” I replied, and asked if she wanted to discuss her case. We missed one another’s calls and then a couple of days later I received a clip of correspondence. It was a simple overdrawn loan account for £40,000 but the primary limitation period would expire in two days!
I immediately reported to the Manolete Investment Committee who authorised me to make an offer. I called the solicitor to relay this, given the shortness of time in which she would need to work - she was very surprised Manolete would offer on such a low value claim and up against limitation.
The initial consideration (which is never refundable) was lower than I would usually have recommended, being £2,000. The reason was that Manolete would not have the benefit of being able to engage in pre-action correspondence after the assignment and would have to issue court proceedings straight away with an issue fee of over £2,000e
Sadly, as conversations with the solicitor progressed about the practicalities of actually getting proceedings issued under the COVID-19 restrictions, it became apparent that we could not get our claim to a County Court within time. Following discussions with Steven Cooklin, our CEO, I was obliged to withdraw the offer to purchase the following day, which the office holder had not yet accepted. What a shamee
My colleague, Dominic Vincent, wrote in the previous Manolete newsletter about dusting off files that need to be progressed. We have all had experience of ‘radiator files’ which have stagnated, even up to the point that proceedings need to be issued. It seems a very good time to examine those cases but everyone should also build into any timetable what is reasonably practical especially under the current extraordinary circumstances we find ourselves in.  e
Hard Times Ahead
On 28 March, the Insolvency Service announced the Government was introducing what are presumed to be temporary reforms to the insolvency law to help companies through the current economic crisis. The reforms that have so far been highlighted are a moratorium on the ability to present or pursue winding-up petitions and the suspension of the law on Wrongful Tradinge
These moves are not without precedent. During the Second World War a range of measures was introduced by the Courts (Emergency Powers) Acts under which debtors’ liabilities were not eliminated but at least postponed. Of particular importance was the Liabilities (War-Time Adjustment) Act 1941 which was designed to save small businesses from bankruptcye.
The Act applied only to persons ordinarily resident in England, or persons, firms or companies carrying on business in England. The Act was aimed mainly at small businesses (in particular shops). However, any person who (or entity which) was in serious financial difficulties, attributable to the circumstances of war, could apply to a liabilities adjustment officer for advice and assistance with a view to reaching “an equitable and reasonable scheme of arrangement with his creditors” and with the long term aim of preserving his business or recovering it when circumstances changed. Although the term “scheme of arrangement” is used, plainly there are things about the Act that foreshadow our modern administrations and voluntary arrangemente
Although reliance on the provisions of the Act was no longer practicably possible after the end of World War II, the 1941 Act remained in force until it was repealed by the Statute Law (Repeal) Act 1971.