March 9th 2015

Spring Newsletter 2015

Welcome to the Spring newsletter

With 6 weeks to go before the General Election there has been a flurry of recent legislative activity in the insolvency sector. Laspo has been given at least another temporary reprieve, insolvency fee estimates/caps are to be introduced and just last week the insolvency-laden Small Business Enterprise & Employment Bill (“SBEE”) received Royal Assent. In the world of insolvency litigation finance, SBEE introduces some important new developments:

  1. Office Holders will be able to sell many of their Insolvency Act claims to third parties (creditors, funders, directors etc). We believe this is a positive development – it gives IPs yet more options to realise value for creditor estates. By selling the claims the IP removes him/herself completely from the risk of adverse costs. Using the Manolete model, the creditor estate can be paid in part or full upfront and receive up to 75% of the proceeds, on a completely risk-free basis;
  2. If action has not been taken by the Office Holder, the Government has new powers to enforce Compensation Orders against delinquent directors. The Government has the power to decide where the proceeds are directed – possibly direct to specific creditors.

These changes are clearly aimed at bringing more delinquent directors to account. However, a sensitive political balance needs to be struck between enforcing the law and improving corporate governance, on the one hand, and promoting a thriving entrepreneurial culture in Great Britain, on the other.

Manolete completes £2.5m expansion funding

Several new developments at Manolete to report. We were pleased to report that we have completed an additional £2.5m expansion fundraising – with immediately available cash invested directly onto our balance sheet. All too often other litigation funders are reliant upon “promised” drawdowns from external parties (that may or may not ultimately materialise). Some draw funding from opaque offshore structures. Others will boast of large new fundraisings but omit highlighting the large cash-burn and ongoing financial commitments that they need to satisfy from historic commitments. In such cases IPs and their lawyers can never be sure how much funding really is available to support their cases.

Manolete’s funds always go directly onto our balance sheet – our accounts are filed at UK Companies House and, as a PLC, we have maximum UK GAAP disclosure requirements, ensuring full financial transparency.

The new funding will be used to fuel the continued rapid expansion of the business – which currently has 102 insolvency litigation case investments (33 ongoing) – making Manolete Partners Plc the largest litigation funding company in the Northern Hemisphere, by volume. With the new financing now complete, we have terminated our relationship with Burford Capital – separate to the expansion financing, existing shareholders have purchased Burford’s entire shareholding in Manolete Partners Plc. All future financings will now be made on a stand-alone basis.

We also recently welcomed to the team Nancy Kaye – a highly experienced and highly effective former Charles Russell insolvency litigator

102 not out!

The number of our UK insolvency litigation investments has now increased to 102 cases – more than doubling in the last 12 months. We will be presenting a full analysis on the results of the first 100 cases at the R3 Annual Conference in Berlin in May. One of the key highlights is that we have never lost a single case. We have never paid a single penny of our opponents’ costs and have never made a claim on an ATE policy. A stat that even the World Cup-winning Australian cricket team could be proud of – 102 not out

Manolete to launch £2.6m claim against Silverstone

As has been widely reported in the media (including several articles in The Daily Telegraph), we have purchased a c.£2.6m claim against Silverstone Circuits. Attempts by the Administrators from Cork Gully to settle the claim amicably came to nothing and we now expect to launch the formal claim through the Courts in the next few weeks

Small case wins

One of the things that sets Manolete apart from other litigation funders is that we invest in small claims as well as multi-million pound claims. The last few weeks have been busy completing a number of these smaller cases:

  • £21,500 settlement against a director of a children’s entertainment business for unpaid loans from the company – a Wilson Field case
  • £95,000 settlement with Network Rail for s127 and s128 claims – a Baker Tilly case
  • £11,000 settlement on an unpaid Director’s Loan Account on a London based retail business – an Absolute Recovery case
  • £10,000 settlement on an unpaid Director’s Loan Account on a Yorkshire based retail business – a Deloitte case
  • £50,000 negotiated settlement with Directors of a North East based manufacturing on a s239 Preference and s212 Misfeasance claim

Our unique operating model means that around 60% of the proceeds on these cases are returned to the insolvent company. Often these smaller claims are the only realisations – which at least go to cover some of the Office Holder’s costs. Our average time to complete these smaller cases is just 2 months.

Thank you

It has been a very busy and exciting start to 2015 – we look forward to continuing our work with you and, as always, thank you for your fantastic business.