Publicly traded funder Manolete has reported its highest number of case referrals since last summer and is bracing for an increase in the number of insolvency claims. Many are expected to involve allegedly fraudulent claims over the government’s Covid emergency support.
Manolete Partners plc, which buys and funds insolvency claims, received 50 case referrals in September, its highest number since July 2020. âIt’s slightly morbid, but for our company, it’s definitely one thing. positive, âsaid CEO Steven Cooklin.
The firm has hired an additional lawyer to handle cases in the northeast and hopes to recruit another in January. âThe challenge is to ensure that we have the internal human resources to deal with the likely very high number of insolvency claims that are going to occur in the coming months and years,â Cooklin said.
The Insolvency and Corporate Governance Act of 2020, introduced to help businesses survive the pandemic, has barred creditors from petitioning for liquidation. As a result, the number of insolvencies in the UK fell by 40%, which had an “immediate ripple effect” on Manolete. Pre-tax profits fell 26% in the year ended March 31, 2021.
On October 1, however, many of these restrictions were lifted and the majority of creditors are now able to initiate liquidation proceedings against the debtor companies.
Cooklin said the company has already seen a “lot” of cases related to allegedly fraudulent Covid emergency funding, such as coronavirus rebound loans and money on leave. âWe expect a lot more. We have already bought a number of these receivables from directors who basically pocketed the rebound loan money and then put the company into liquidation in the hopes of burying it and not having to pay it back, âhe said. he declared.
In August, Burford Capital, another litigation funder, reported that more than 40% of its cases had been delayed this year, citing postponement of hearing dates and a reluctance to settle disputes.
However, Cooklin said insolvency claims are less likely to be affected by court delays, as only 3% of his cases go to trial.
Manolete shares plunged from 565p to 195p between May 2020 and February 2021, but have since risen steadily, now standing at 310p.