A new company has been launched to help sell or run off those law firms working in the personal injury (PI) arena which, following 1 April changes, are in distress or facing insolvency.
Recovery First has been set up to assist restructuring and insolvency businesses involved with distressed PI firms. Ensuring SRA compliance, it will help to discreetly sell a PI firm’s cases to multiple purchasers and achieve a higher value for the work in progress (WIP) by removing some of the risks associated with purchasing books of business from distressed firms.
In some cases, as part of the service, Recovery First will also facilitate the availability of immediate cash to cover administration set up costs.
In offering a fully managed and compliant run off for businesses, particularly in securing a panel of several firms to run off the caseloads, Recovery First will not only avoid under value sales but achieve maximum value for the benefit of the creditors.
Launched by managing director, David Johnstone and operations director, Nicola Klimkowski, it is an experience based company that offers a quick and clean withdrawal from the market with optimum return.
David has many years’ industry experience, but as director of a business that provided loan funding for firms of solicitors from 2004 to 2008, which was then strategically placed into run off, he gained first-hand experience of the challenges faced when exiting the PI arena. After successfully running off the loan book, by following all the cases through to conclusion in order to recover the loans, he decided to put his experience and expertise to good use.
Commenting on Recovery First, David said: “Many personal injury law firms are in distress due to the fact they must now settle in excess of 10 matters to achieve the same turnover resulting from three matters pre 1 April, they are therefore in the situation of being forced to sell or run off.
“Despite the increasing efforts to get such firms to recognise the seriousness of the situation, many are still leaving it too late to engage outside assistance. It means they could either require protection when going through a restructuring period or, worse still, a formal insolvency process. What we will do is dramatically reduce the discounts applied by acquisitive firms and help achieve up to 100% of the WIP value for the vendor.
“Previous experience as a creditor of failing law firms has taught me how to put in place a structured and manageable process that allows for a smooth transition for all involved. For those selling, we will ensure minimum due diligence for speedier transactions, lower costs and maximum WIP value. This has the potential to change the situation from one of derisory returns to creditors to one where creditors could receive 100 pence in the pound. It also means there could be value available for distribution to equity stakeholders.”