Dozens of medical agencies are set to be left out of pocket after liquidators advised that a closing law firm has virtually no assets.
The Gazette understands that insolvency firm Quantuma wrote to prospective creditors last week informing them that Bolton-based Accident Injury Solicitors Ltd is being placed into voluntary liquidation. Medco, the organisation for medical experts, notified authorised users today to say that the Solicitors Regulation Authority had confirmed the 16-year-old firm's closure.
The firm was as recently as 2020/21 posting turnover of around £5.5m and pre-tax profits of almost £90,000.
But the business was affected by the whiplash reforms implemented in May 2021 and which prompted the firm to stop handling low-value RTA claims. It tried to diversify into other areas of law by increasing its marketing spend but this did not generate a sustainable workstream and staff numbers were gradually whittled down from a peak of 70 to just three today.
One creditor, the owner of a medical reporting agency, has questioned why no money appears to be left for any creditors given the firm’s most recently-reported finances.
The Quantuma report states that in June, Accident Injury Solicitors entered an agreement with another firm for the sale of its remaining 49 live cases. This sale was worth around £3,800. A few weeks later the company sold its debt cases for around £12,000. The business has £11,551 remaining in cash.
But according to the balance sheet for the year to 31 March 2023, the firm had book debts of £1.5m and cash reserves of £385,000 (these reserves had plummeted from £2.1m in the previous year).
Meanwhile, some 59 creditors have been identified and are owed more than £2.5m in total. Many of these will have provided reports for cases that appear to have vanished.
The medical agency owner, who did not want to be identified, said it was likely that at least three or four of the medico-legal agencies owed money by Accident Injury Solicitors might not be able to trade as a result of their losses. The list of creditors seen by the Gazette shows that 13 medico-legal companies are owed at least £10,000, with one owed £310,000 in total.
‘The relative non existence of live cases or other assets within the business makes no sense when compared to what is owed by the firm to medical agencies for report fees,’ said the creditor.
Responding to the liquidation of Accident Injury Solicitors, Alexander Landau, the owner of medical reporting organisation Chartwell Medical, said these are ‘eye-watering losses’ being faced by some companies with no chance of any recovery.
Landau, whose firm is not a creditor of Accident Injury Solicitors, wrote on LinkedIn: ‘Some solicitors do feel that medical agencies offer a free line of credit (whilst this is true) and that they can use and abuse the medical agencies. Though there are those who treat medical agencies as a true partner (which makes them a pleasure to deal with).
‘I don’t know the answer, though I am told that we are aggressive in our debt collection, and this incident shows why this is important.’
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