NorthEdge Capital Expected to Lose £22.5 Million Through Roberts Jackson Insolvency

In September 2018, Roberts Jackson Solicitors, the claimant occupational disease firm, entered into administration. This story was featured in edition 249 of BC Disease News (here).

Although the firm was almost immediately merged with alternative business structure (ABS), AWH Legal, we subsequently revealed, in edition 257 (here), that when Roberts Jackson ceased trading, the business owed £4.25 million to NatWest, £22.5m to private equity (PE) investor, NorthEdge Capital, and £13.8m to unsecured creditors.

Quantuma partners, Sean Bucknall and Andrew Hosking, were appointed joint administrators. By their reckoning, it was considered that the sale of Roberts Jackson (work-in-progress, debtors, disbursements and accrued revenue) to AWH represented the best value for creditors and the best prospect for recouping a proportion of the £40 million in credit.

However, Mr. Bucknall has since forecasted that the PE investor, which injected £15 million into Roberts Jackson in 2014 ‘to accelerate the growth of the business’ and ‘capitalise on new opportunities’, is unlikely to recover the entirety of its £22.5 million floating charge.[i]

So, where are 10% of Roberts Jackson’s profit costs and success fees from settled cases, 50% of the recoverable value of disbursements, 90% of debtors and 60% of accrued income going?

It is estimated that around £2.7 million will be shaved off the firm’s £4.25 million revolving credit facility with NatWest, while claims from unsecured creditors (of which there are currently 91), will likely be paid a dividend ‘in the range of 3.2-4.3p in the pound’.

£115,000 has already been paid out to settle a redundancy claim, brought by founders, Karen and Oliver Jackson, which AWH was indemnified against under the terms of the acquisition.

 

[i] Neil Rose, ‘PE investor in failed law firm set to lose £22.5m’ (17 May 2019 Legal Futures) <https://www.legalfutures.co.uk/latest-news/pe-investor-in-failed-law-firm-set-to-lose-22-5m> accessed 17 May 2019.