Unsecured creditors are set to receive nothing from the £23.3m they are collectively owed by the collapsed north west firm Pure Legal.

Administrators reported this month that there is unlikely to be anything left once the firm’s lenders and former staff have been repaid in full. Pure owed around £1.85m to Novitas and £6.1m to Perspective Investment: both these secured creditors will be paid in full following the firm entering administration last year. The administration was brought about after a High Court petition by Novitas following missed payments.

Meanwhile, other lawyers are marketing themselves to run professional negligence claims against Pure Legal for those facing claims for legal costs because their cases have been, or are likely to be, struck out by the court.

National firm Hugh James said Pure handled thousands of claims relating to the mis-selling of mortgages, pensions and cavity wall insulation. The firm said: ‘We are now reaching out to Pure clients that are facing claims for costs to come forward. We have already secured repayment of all legal costs in our first case and believe we can help many others. We are conducting all cases on a "no win, no fee" basis.’

Joint administrators from Kroll Advisory were appointed last November and have now sought to extend the administration to November 2023 following complications with the fallout.

Few of Pure’s assets – most of which are the firm’s work in progress – are able to be realised quickly, with due diligence being carried out on other firms to take these cases on. The Pure directors had estimated that WIP was worth around £30m, but the administrators say recoveries may be ‘significantly lower’ than this and are dependent on the outcome of negotiations with ATE insurers, litigation funders and the firms instructed to continue with ongoing cases. So far the administrators have recovered a total of £214,500 in relation to settled cases.

In April 2021, Pure sold its investment in another solicitors firm to a third party, with a deferred payment due in April this year subject to financial performance. The administrators’ report confirms the purchaser did not meet those financial targets and so no deferred payment was made.

The administrators say they have carried out extensive investigation into the company’s affairs, going through electronic records and bank statements. A confidential report has been filed with the government, and the joint administrators have ‘several’ lines of enquiry they continue to investigate.

The report states that administrator fees have already exceeded the proposed fee estimate ‘due to the greater than anticipated correspondence in dealing with transfer of the case files and other client matters’. Fees for handling administration are now estimated at £2.3m.

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