A claims management company specialising in personal injury has gone into administration following a winding up petition by the tax authorities.
Manchester-based 33 Legal Limited had fallen behind in its obligations to HM Revenue & Customs and owed £1.4m by the time the petition was filed, according to an insolvency statement. An update by administrators Leonard Curtis outlined that the company could not pay its debts and, without an unlikely injection of working capital, needed to enter a formal insolvency process.
The update also reveals that 33 Legal, which began trading in May 2017, was owed around £2m by three connected companies at the time of its collapse: Exclusive Repair Network, Exclusive Hire Solutions (dealing with repair and credit hire respectively) and Exclusive Law Limited, an SRA-registered practice based in Manchester. All the Exclusive businesses, as well as 33 Limited, are jointly owned by directors Andrew Doyle, a solicitor, and Jordan Green.
The business model of 33 Legal was to refer leads to connected companies on the basis that a referral fee would be paid upon completion of the claim. But the administrators’ statement says that the connected companies are not in a position to make payments.
In particular, it notes, the legal practice, which owes £575,000, has been ‘affected by severe delays in the court process since the commencement of Covid-19 which has resulted in cashflow difficulties for that business’.
The credit hire business was hit by a shortage of new cars during the pandemic and, more recently, because of the war in Ukraine.
In addition to the money owed to it, the administrators’ report states that 33 Legal has made a number of loans to other connected companies, including around £607,000 to Exclsve Limited [sic], a newly-opened bar and restaurant where Doyle is listed as a director, and £120,000 to Exclusive Health Limited, which supplies medical reports used in client claims. Green is listed as a director of this business.
Following insolvency proceedings beginning, the 33 Legal business was marketed for sale in June and received 15 expressions of interest – 14 from unconnected parties and one from a connected party. The only offer received was from the connected party, and the sale was agreed. The purchaser, whose directors are Doyle and Green, will pay £25,000 for the business over several instalments. All 19 members of 33 Legal's staff have been transferred to the purchaser.
According to the administrators’ report, 33 Legal recorded turnover of £6.4m in the year ending 31 August 2021, with £366,000 trading profit. But for the year to March 2022, the business lost £22,000 based on £4m turnover.
Neither the bank nor HMRC, listed as a secured creditor and secondary preferential creditor respectively, are likely to receive the money they are owed in full. Administrators said it was unlikely there will be sufficient funds to enable any form of distribution to unsecured creditors.
