A litigation funder specialising in motor finance claims has entered administration, increasing pressure on law firms exposed to the stalled claims market.
Woodville Consultants, based in south Wales, had funded more than 300,000 claims since 2019 and is believed to have been working with six law firms.
Legal Futures reports that the administration was sought by investors whose loan notes in Woodville were in default and unpaid.
Claims pipeline stalls
Administrator Kroll Advisory has now begun work at Woodville’s offices in Pontypridd to understand all aspects of the company and its affairs.
It said Woodville’s cash resources were low and that any further lending would be used to support operations with the aim of protecting its loan book to UK law firms.
Woodville’s latest accounts, for the year to December 26, 2024, showed debtors of £249 million. Turnover was reported at just over £56m, with profit after tax of £3.3m.
The company employed 10 staff and had two directors, Peter Legge and Ann Marie Bell, who were the joint owners of the business.
The administration comes as motor finance claims remain heavily affected by delays linked to the Financial Conduct Authority’s redress scheme and the legal challenges surrounding it.
The FCA’s motor finance compensation scheme has been partly suspended by the Upper Tribunal while legal challenges are heard, meaning lenders are not currently required to calculate or pay redress under the scheme.
The London office of 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 at Crowell & Moring, told Legal Futures that the FCA process meant the claims were “effectively on hold” and Woodville was therefore unable to achieve repayments from law firms.
Law firm exposure
Muscutt said initial investigations suggested the up to six law firms could be impacted and that the administrators would work with those law firms to assess the status of the loan book portfolio, the progress of the firms and the steps needed to preserve consumer claims.
Muscutt said: “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 that Woodville’s funding model appeared to have a fundamental flaw because loan notes required fixed quarterly returns and repayment dates without reference to recoveries from underlying consumer claims.
He said: “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.”