Seth Lovis ‘Very Unlikely’ to Pay Millions in Unsecured Creditor Debts

In edition 265 of BC Disease News (here), we reported that claimant personal injury specialist, Seth Lovis & Co, had ceased trading and would therefore no longer be taking on new client matters. All 45 fee earning staff members were made redundant in the early stages of winding down.

The business had encountered growing financial instability, as rising capital requirements were squeezed by failed attempts to settle a large number of conditional fee agreement (CFA)-funded cases (mostly cavity wall insulation claims).

In March 2019, joint administrators (Finbarr O’Connell, of Smith & Williamson LLP and Julien Irving, of Leonard Curtis Recovery Limited) were appointed to manage the firm through the insolvency procedure and last month, the latest Progress Report was filed with Companies House.[1]

To date, around £1.3 million has been recovered from the firm’s work-in-progress (WIP), while WIP tied up in live matters could bring in an additional £3.4 to £4.0 million, potentially by 2022 (‘uncertainty’ is naturally created by case-to-case CFA arrangements).

In addition, the Report divulges that an ‘acceptable offer’ has been made for both London trading premises (25 John Street and 17 John’s Mews), with the administrators conveying optimism towards the imminent completion of sale.

For the time being, the insolvency practitioners have clarified that‘… there remains significant work to be undertaken before being able to conclude on the final outcome for creditors’, which is why investigations into the financial position of the company are still ongoing.

Seth Lovis has 3 secured creditors: RBS, Doorway Capital and VFS. These are owed £3 million, £1.5 million and £3.2 million, respectively.

Nonetheless, the extent to they will receive payments from the realisations of WIP and property is currently ‘uncertain’.

As for unsecured creditors, claims for outstanding debts have been made in the sum of £3.6 million (and rising?). This is £100,000 more than the initial estimate in the directors’ statement of affairs.

Adjudication of these claims has not yet been undertaken and this will remain the case until it is ensured that a dividend will be payable. The current position, however, is that such an eventuality is ‘very unlikely’.

 

[1] John Hyde, ‘Creditors owed £3.6m by closed PI firm set to end up with nothing’ (11 June 2020 Law Gazette) <https://www.lawgazette.co.uk/news/creditors-owed-36m-by-closed-pi-firm-set-to-end-up-with-nothing/5104619.article> accessed 11 June 2020.