Nothing in the pot for employees at failed PI firm



Creditors of a defunct personal injury firm have been told they face little to no prospect of recovering any of their money. An administrator’s report for Nesbit Law Group, which collapsed 18 months ago, has confirmed the bleak prognosis for those waiting on payments from the firm’s work in progress.

Unusually for law firms that have suffered this fate, administrators have not been able to find enough funds to pay the estimated £33,000 claimed by former employees. This includes arrears of pay, unpaid pension contributions and accrued unpaid holiday.

These outstanding amounts rank as preferential claims in the administration estate, but based on current information administrators say it is ‘unlikely’ funds will be avilable to enable a distribution.

Meanwhile, 23 unsecured creditors have submitted proof of debts adding up to around £1.1m. 

Nesbitt Law Group was a well known name in the personal injury sector until it was hit by civil justice reforms in 2013 which reduced fixed costs for claims and abolished recovery of success fees and ATE premiums. The business posted £4m turnover in 2015 but that fell by more than half over the next two years, with staff numbers falling from 95 to 20. Coincidentally the firm was sponsoring Bury Football Club, which was expelled from the Football League last year over its own financial difficulties.

A major problem with paying Nesbit Law Group creditors is that cases on the firm’s books have not been successful. Administrators say that, during the process of transferring work in progress, a large proportion of case files were rejected by the appointed panel of solicitors due to them being of poor quality or having already been settled or lost. No realisations have been received from the company appointed to handle cases, and any future recoveries are ‘not anticipated to be significant’.

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Funds may be due to the LLP from various claims management companies in respect of referral fees from failed cases, but investigations have highlighted that the majority of these CMCs have been dissolved and/or are no longer trading.

Part of the joint administrators’ duties include carrying out investigations into what assets the LLP has, including any potential claims against members or other parties, and what recoveries could be made. They have reviewed the LLP’s books, records and accounting information and requested further information from the members, inviting creditors to provide information on any concerns they have regarding the way in which the LLP’s business has been conducted.

The total costs of the administration stand at more than £250,000, based on an average hourly rate of almost £306.

 



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