Pure Legal - Case Update

The joint administrators of a failed claims firm have provided an unfortunate update to creditors regarding their likely recoveries.

Pure Legal, a Liverpool-based law firm with a second office in Prescot, was placed into administration in November 2021 on application by lenders Novitas Loans Limited (Novitas) and Close Invoice Finance Limited (CIFL). At the time, the firm employed over 116 staff members across its two sites and was managing over 28,000 cases.

Pure Legal’s interest in its clients’ claims was sold to four purchasers via pre-pack sale: SSB Group Ltd, Clear Law LLP, FD Law Limited (trading as Hayes Connor Solicitors) and Keller Lenkner UK Limited. The transfer of client claims was subject to the consent of the relevant client and, in a number of cases, the relevant ATE insurer and litigation funder. The consideration was payable on an entirely deferred basis following the successful resolution of an individual claim and calculated by reference to WIP realisations, any success fees and certain other deductions.

At the time of the administrators’ appointment, the directors estimated the realisable value of the firm’s WIP at over £30 million. The administrators expected that secured creditors would be paid in full and that there would even likely be a distribution to unsecured creditors.

However, over time, it became apparent that nowhere near £30 million would be collected, and the joint administrators have now revealed how much the outlook has changed. In their most recent report, the administrators share that just under £500,000 has been recovered from work that was being handled prior to their appointment, and that the vast majority of cases have been closed or discontinued. As a result, the prospects of distributions being paid to even secured creditors (Novitas, CIFL and Perspective Investment Fund Vehicle Limited) remain uncertain.

Robert Armstrong and Simon Stibbons of Kroll Advisory are the joint administrators. Their most recent progress report can be found HERE. They have been assisted by DLA Piper, Field Fisher and Eversheds Sutherland.