Lawyers and legal services firms are among creditors likely to recoup little or nothing after a Manchester firm was liquidated owing more than £3m. Carter Law Solicitors Limited was wound up last month and its assets purchased from the liquidators by AWH Legal, a firm incorporated in December 2015.
The successor practice is 100%-owned by Abdul Waqass Hussain, who resigned as a director of Carter Law last September.
Liquidators today insisted the acquisition is best for staff and creditors and comes following enquiries from ‘a number’ of interested parties.
According to a statement of affairs published this month, Carter Law owed £3m to unsecured non-preferential creditors.
This figure includes £2.4m in trade and expenses claims, £122,000 to HM Revenue & Customs and more than £500,000 in loans to directors.
The statement lists the value of work in progress as just £1. Only £5,000 is likely to be realised to pay back preferential creditors, according to the document.
AWH Legal told the Gazette that it is working with liquidators and creditors throughout the transition period, and will pay creditors from any disbursements recovered on the purchased work in progress. It stressed that nearly a fifth of the money owed is due to directors who had sought to keep the business going.
The 16-page list of creditors includes medical reporting agencies, insurers and barristers chambers.
Manchester-based Insure Legal is owed £488,000, legal expenses insurer ARAG is owed £392,000, and insurer Amtrust Europe Legal is owed almost £300,000. Nausheen Arif, still listed as a director of Carter Law, is owed around £427,000.
The likes of Speed Medical, Palm Medical, Zenith Chambers, and Doctors Chambers are all due at least £50,000 as company creditors.
Restructuring specialist Quantuma, which has handled the acquisition by AWH Legal, stressed that the successor practice has ensured that 44 jobs are saved and achieved the best deal for creditors.
Carter Law was established in 2010 and specialised in family law, wills, immigration and personal injury with a focus on road traffic accidents.
The firm was in the news last summer when it received a string of abusive messages following a Facebook advertisement targeted at potential Muslim clients.
The firm said the comments were ‘unashamedly racist’ and stressed the services advertised, for Islamic family law and divorce settlements, were within the bounds of the law of England and Wales.
Andrew Hosking, who led the Quantuma team that advised on the Carter Law acquisition, said these are ‘trying times’ for firms that rely on personal injury work.
‘Both the LASPO reforms and the forthcoming rise in the limit in the small claims court for all personal injury claims from £1,000-£5,000 is resulting in a radical shake up in the profession and we expect to see more acquisitions, mergers and insolvencies,’ he added.
