Motor finance claims: Litigation has stalled
A litigation funder which specialised in car finance claims has gone into administration because of delays in progressing cases, with its latest accounts showing outstanding loans of £249m.
Woodville Consultants, based in south Wales, said it had funded over 300,000 claims since 2019. It is believed to have been working with six law firms.
Kroll Advisory, appointed as administrator by the High Court last week after a hearing, said the administration was sought by investors whose loan notes in Woodville were in default and unpaid.
Kroll said it had started work at Woodville’s offices in Pontypridd, which would include “obtaining information to understand all aspects” of the company and its affairs.
“We will also be looking to engage with the potential external funder who, as we understand it, may be prepared to lend funds to the company as previously notified to investors.
“We understand that the company’s cash resources are low. Any lending to the company will be to support its operations with the aim of protecting its loan book to the UK law firms.”
The London office of US law firm Crowell & Moring, which represents investors, secured the contested order from the High Court. It has now been instructed by Kroll to support the administration.
Paul Muscutt, restructuring and insolvency partner, said initial investigations indicated that the administration would affect “possibly six law firms” but “the amount of claims taken on is under review”.
Mr Muscutt said they would be working with the law firms “to assess the status of the loan book portfolio, the progress of the law firms generally and to take actions, where appropriate, to preserve the underlying consumer claims to maximise realisations and repayment to Woodville”.
The first priority of the administration was to see if the business could be rescued and to preserve the loan book and maximise recoveries for investors.
“We will also be looking at the conduct of the directors, associated parties and the introducers who are suspected of wrongdoing and misapplication of investor funds,” he added.
Mr Muscutt said the fundamental flaw with Woodville’s model was that the loan notes “obligated Woodville to pay fixed quarterly returns with fixed repayment dates without reference to recoveries being achieved on the underlying consumer claims.
“It is highly questionable how this was ever workable from the outset when the timescales to realise consumer claims were uncertain in time and quantum and many claims dependent on a number of factors including court timetables, the consumer’s eligibility and disputes as to financial loss on the part of the consumer.”
The Financial Conduct Authority’s work to introduce a motor finance redress scheme, now suspended pending the ongoing legal challenges to it, meant the claims were “effectively on hold” and so Woodville was “unable to achieve repayments from the law firms”.
Mr Muscutt said: “It is currently unclear how Woodville has funded quarterly returns and redemptions to loan note holders in the period leading up to the administration and this is currently being investigated.”
He added that Fenchurch Legal, which entered administration in April this year and on which Crowell & Moring is also instructed, operated a similar model.
Before that, in December last year, Katch Fund Solutions put its litigation fund into liquidation, blaming the “prolonged resolution timelines” of motor finance claims.
Woodville’s latest company accounts, for the year to 26 December 2024, showed that debtors of £249m. Turnover was reported as just over £56m, with profit after tax at £3.3m.
The company had 10 staff and two directors – Peter Legge and Ann Marie Bell, the joint owners of the company, who reportedly opposed the administration order.