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Post-listing case spike spurs insolvency funder

Cooklin: Case metrics have all doubled

Manolete Partners, the litigation funder specialising in insolvency, has seen a surge in interest since listing on the stock exchange, leading to a strong financial performance, its annual results have shown.

For the year to 31 March 2019, revenues increased 30% to £13.8m, with profit before tax up 61% to £5.9m.

Manolete is unusual compared to other litigation funders, most notably in that it acquires 90% of its cases [1] from insolvency practitioners, as opposed to simply funding them.

This allows the company to run the cases how it wants, and Manolete only takes its share after all the costs and creditors are paid.

Chief executive Steve Cooklin told Litigation Futures that all of its case metrics – enquiries, and new and completed cases – have doubled in the year. It has invested in 59 new insolvency cases, compared to 29 in the previous 12 months, 44 of which were signed after December’s listing.

It has invested in 300 cases in total since launching in 2009, of which 201 have been completed – last year it completed six every four weeks.

In the 2019 financial year, completed cases recovered a gross total £8.8m in cash before payments into insolvent estates, a 48% increase.

The average gross profit per completed case for Manolete was £99,000, up from £82,000, which it said reflected the continued rise in the average size per case.

Manolete’s team of in-house lawyers, who are charged with bringing in new business, has grown substantially, with six appointed in regions around the country over the year, making nine in total.

The stock exchange announcement said: “We believe that, with an enhanced status as one of the UK’s leading specialist insolvency litigation finance companies, combined with an increased regional presence, we will be able to strengthen our relationships with insolvency practitioners and legal firms, which will lead to an increased volume of enquiries.”

Alongside this, Manolete has signed an exclusive three-year sponsorship contract with the Institute of Chartered Accountants in England and Wales’s restructuring and insolvency community, became a key strategic partner of insolvency professional trade association R3 and agreed a three year sponsorship deal with the Insolvency Practitioners Association.

“These sponsorship deals are an integral part of our carefully planned marketing strategy. They give the company a very high profile with the insolvency community in their technical conferences and networking events and ensure that the Manolete name and its business model are well recognised.”

Recently, the High Court ruled [2] that the Arkin cap should not be applied automatically in all cases involving commercial litigation funders, meaning funders can be fully liable for a successful party’s costs, not capped at the amount of its own investment.

Mr Cooklin said this changed the economics of third-party funding “hugely” for other funders, but not Manolete as it bought most of tis cases.

Manolete’s share price has rocketed since listing at 175p, hitting a high of 590p in early May and closing on Friday at 457p.