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Insolvency litigation funding continues to thrive in lockdown

[1]

Cooklin: Excellent returns for everyone

Lockdown does not appear to have affected the business of funding insolvency litigation, with market-leader Manolete Partners acquiring or funding 84 new cases since April.

During the current trading period since 1 April, Manolete has also completed 40 cases, including one of the larger cases in its portfolio settling for £15m, which realised a gain of £4.1m and a return on investment of 1,640%.

Creditors will receive £10m; Manolete had forecast a settlement of £5.5m in its accounts.

The 84 cases represent a 65% increase on the same period in 2019; it backed 141 cases in the full year to 31 March 2020.

Manolete generally buys the assignment of cases and runs them itself, rather than funds the insolvency practitioner. Many of the cases are for six-figure sums but its larger cases range up to £40m in value.

Chief executive Steven Cooklin said: “We are very pleased with the latest period of current trading and the significant outcome on one of our larger claims – not only for our shareholders but also for the large return it generates for the creditors, particularly HM Revenue & Customs, which is the largest creditor in that insolvent company estate by far.

“This case serves to highlight the excellent returns our business model generates for all stakeholders.”

However, the news only briefly pepped up Manolete’s share price, which has flagged significantly since an anonymous attack in July [2] on the company’s model.

Manolete’s shares reached a high of 585p in May after rapidly recovering from the market-wide dip caused by lockdown, but tumbled to 410p in the wake of the attack and have continued to fall steadily since.

The trading update briefly pushed the shares up to 340p last week, but they have since slid to 310p at the time of writing.