A law firm has slashed its debts to a former claims management company – but the deal appears likely to leave tax authorities owed nearly £2m significantly out of pocket.
A six-month report for the collapsed Manchester-based CMC 33 Legal, which appointed administrators in July 2022, has revealed that the business was owed £2.3m by so-called ‘connected parties’. These included a host of companies under the umbrella of the Exclusive Law Group, which is owned by solicitor Andrew Doyle and Jordan Green, who are also the sole directors of 33 Legal.
According to the administrators’ report, debt collection specialists were drafted in to assess the prospect of recovering some of the monies owed by inter-company debtors, who include SRA-regulated Exclusive Law Limited.
A settlement agreement was reached whereby Exclusive Property Services Ltd effectively bought off the inter-company debts for a total of £250,000.
A payment plan was then put in place under which £3,205 is paid into the 33 Legal estate every Friday for 78 weeks, with this arrangement due to end by September 2024.
Meanwhile, there would appear to be insufficient funds to pay off various creditors owed money by 33 Legal. Barclays, with which the company had an outstanding overdraft of around £54,500, is listed as a secured creditor but is not expected to be paid back in full.
HM Revenue & Customs has made a secondary preferential claim for £1.5m and has an unsecured creditor claim worth around £269,000.
Administrators say there may be sufficient realisations to enable a distribution to the secondary preferential creditor, but only subject to realisations from the inter-company debt and final costs of the administration.
According to the first 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.
