A struggling claims firm was dealt its final blow when counsel advised its mortgage mis-selling cases were likely to fail, administrators have revealed.

The notice of administrators’ proposals also disclosed that north west firm Quanta Law folded in June owing more than £31m to unsecured creditors – none of which is likely to be paid back.

All 26 staff at the firm, which also traded as Quanta Claims, were made redundant as its affairs were put into the control of administrators from insolvency firm Begbies Traynor. A petition to wind up the business was issued in April by HM Revenue & Customs, but the issues started much earlier, according to the report published this week.

The company was incorporated in 2018 and specialised in the management of financial mis-selling claims, with most relating to mortgage mis-sale and overcharges. The firm and its clients relied on three specialist lenders, Nera Capital, Affiniti Finance and Duologi, to finance upfront costs and disbursements.

But in November 2021, Affiniti itself entered administration and Quanta became dependent on the financial support of its controlling shareholder Robert Scott Cooper. He stepped back from the business due to ill health towards the end of last year and died in May.

In December 2022, Quanta received an adverse counsel’s opinion in respect of the mortgage mis-selling cases. In addition, it began to receive adverse decisions from the Financial Ombudsman about overcharge cases. As this majority of the caseload relating to this work, these developments had a ‘significant impact’ on the company.

Administrators revealed that in October 2022, Quanta entered into an agreement to transfer the company’s interest in monies due from certain cases to Ryans Solicitors Limited, a Warrington firm solely owned by Joseph Ryan. Under the terms of this deal, £144,000 was payable to the company. RSL has also provided loans to the company for £732,000 and took assignment of the £4m debts owed to funder Nera.

The administrators said they will review the deed of assignment ‘to understand whether the transaction was conducted at fair value’ and assess whether any further action is needed. According to information passed to the administrators, the 4,796 cases transferred are worth £22.1m in damages with an estimated recovery through costs and success fees of £7.8m.

The list of unsecured creditors reveals that £31.6m is owed to the group. This includes £16.7m owed to Specialist Lending Limited (trading as Duologi) and £5.7m owed to Affiniti Finance Limited. Based upon realisations to date and estimated future realisations no funds will be available for unsecured creditors.

Preferential creditor claims include almost £40,000 owed to staff in unpaid wages and pension contributions, while HMRC – owed at least £2m – is a secondary preferential creditor. Both stand to receive some payment.

 

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