Manolete Bulletin, 7 April 2021
Manolete and Penningtons: One Solution for Business Interruption Insurance Claims
By Nick O'Reilly, Chief Operating Officer
Ever since the Supreme Court’s decision in Financial Conduct Authority v Arch Insurance & Others  UKSC 1 in January, I have been discussing with colleagues and Insolvency Practitioners how to best approach making claims (if appropriate) for insolvent businesses affected.
In the right circumstances and, provided the policy wording is close enough to the relevant samples considered in the Supreme Court ruling, we are able to assist Insolvency Practitioners in commencing claims for recoveries. This will provide the Estate with an immediate cash payment, a large share of any final recovery and complete protection from adverse costs.
Manolete is the market leader in financing claims on behalf of Insolvency Practitioners so it is only right we should act as market leader in financing Covid-19 business interruption claims. We have teamed up with expert lawyers from Penningtons Manches Cooper LLP to offer a solution to commencing and settling claims with the various insurers.
The Supreme Court’s decision has clarified when policies (depending on their wording) should respond to claims for losses resulting from business interruption caused by:
- the occurrence of a “notifiable disease” (such as Covid-19) within a certain radius of the insured company’s premises (“disease” clauses);
- prevention of access to, or use of, the premises owing to restrictions imposed by a public authority/Government advice (“prevention of access” clauses); and/or
- a combination of the above (“hybrid” clauses).
The Supreme Court construed certain wordings in both the ‘prevention of access’ and ‘hybrid’ clauses more widely than the High Court had done previously to decide that they can bite when the relevant business has suffered a partial closure, as well as an entire one.
The upshot is that, if you are the office-holder of a company which:
- had non-damage financial business interruption cover in place pre-insolvency (i.e. cover which was not contingent on physical loss/damage to the company’s stock and/or its premises);
- suffered a full or partial closure of its business owing to the occurrence of Covid-19 and/or the associated restrictions; and
- incurred financial losses as a result
you may be sitting on a valuable claim which could generate significant returns for creditors.
What to do
Initial steps to take:
- Check with the insurance company involved pre-insolvency or ask your specialist insurance brokers to review the position and determine whether the company may have a valid business interruption claim (rather than wait for insurance companies to contact you).
- If you establish there may be a claim, contact us and together with Penningtons Manches Cooper we will quickly determine whether the claim has merit and whether it would be economic for Manolete to finance it.
If we decide the claim can be financed, then an assignment offer will be made based on the well-established Manolete offers for insolvency litigation and we will instruct Penningtons Manches Cooper to run the cases.
Our offer will include a non-refundable, initial cash consideration payment to the Estate and at least a 50% share of the net proceeds (net only of external legal and related costs and the initial payment). On larger claims the percentage to be paid to the Estate will be significantly higher. We will often be able to offer a larger, single, immediate cash sum for 100% of the claim, if that option is preferred.
As you know, we have a proven track record of successfully bringing claims and we will use the litigation skills we possess together with expert legal input to settle these claims as soon as we can for the best sum that can be achieved.
Don’t delay – the more cases with a particular insurer that we can finance, the greater the chance we can achieve a global settlement which will minimise costs and improve returns to insolvent estates.
Be proactive – review the files and consult the insurer, or the broker who provided the insurance survey, and check whether the company has a claim. It could, quite literally, pay dividends to creditors.
We have a specialist team at Manolete ready to deal with your claims. Please do not hesitate to contact either me or Henry Glen.