Last call for your urgent help please

Before we offer our seasonal best wishes, I wanted to ask you again to take a few minutes, before the end of the holidays, to help Professor Walton in the completion of his survey on insolvency litigation funding. The IPA and ICAEW have kindly supported the survey and they appreciate that it is important to learn how the insolvency sector has evolved in the last few years. If Professor Walton can get another 25 survey returns, Manolete pledges to give £5,000 to Great Ormond Street Christmas Stocking Appeal, a charity very close to my heart. We would be very grateful if you would follow the link here and complete the 5 minute survey.

The results of Professor Walton’s work will be shared freely with the insolvency and restructuring community on our website: www.manolete-partners.com

2019: Generating huge value for creditors, IPs and insolvency lawyers

The Manolete team has been working flat out in recent months and this shines through when you look at the latest case figures. During 2019, we have signed 108 cases already which makes me very proud to have such a highly talented and hard-working team. In the same period, we have completed 27 cases where we have paid over £2.1m to the legal teams chosen by IPs. And for the IPs, proceeds of over £2.6m were generated for the benefit of Insolvent Estates.

TRI - Third time lucky

Last month, we were absolutely delighted to be named Insolvency Litigation Funder of the Year for the third time in four years at the Turnaround, Restructuring and Insolvency Awards. I have to say it is the same thrill each time because the award is voted for by our peers so there is no higher possible prestige.

City award reflects on the work of all Insolvency Professionals

It is almost exactly a year since Manolete became a listed company on AIM. Floating has contributed very significantly to our growth as a business, not least by our ability to give more substantial upfront payments to Insolvent Estates.

So it was a wonderful surprise last month when Manolete was named Growth Company of the Year at the Shares Awards. It is an annual event which celebrates the best of the UK financial services industry - the Shares Awards are voted for by the general public. Manolete was victorious in a category which included household names such as Greggs, Dunelm and Ocado. I believe that awards like this, outside of the immediate insolvency industry, really help to highlight to the wider community the outstanding work undertaken by IPs and insolvency lawyers.

Litigations Futures: High Court ruling "shows strength of Manolete model"

Kindly reproduced from an article in Litigation Futures dated 5 December 2019.

A High Court ruling refusing to set aside £4.3m judgment in default in a suppressed sales case shows the strength of the litigation funding model used by Manolete Partners, it has been argued.

Deputy Master Nurse held that the defendant, the director of a restaurant business on the Edgware Road in London, had no reasonable prospects of defending the claim.

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

In Manolete Partners v Siza, Ismael Majed Siza was a director of Palms Palace Ltd, which operated as a restaurant and Shisha bar. It was investigated in respect of suspected suppression of sales after its bank accounts recorded that no cash had been banked for a substantial period. HM Revenue & Customs (HMRC) had concerns that the ‘no sale’ and ‘void’ button on the till had been regularly used when in fact a transaction had taken place.

HMRC was also concerned about a number of negative sales, out-of-hours sales and under declared VAT due to a large number of sales being declared not subject to VAT.

HMRC ultimately assessed the company for £3.3m in tax and penalties, and considered that £4.2m which it calculated as the suppressed sales should be allocated to Mr Siza’s directors’ loan account. The company went into creditors voluntary liquidation.

With no assets in the estate, the liquidator, FRP Advisory, assigned the claim to Manolete. It issued proceedings and obtained judgment in default of an acknowledgment of service, which Mr Siza then tried to set aside.

Deputy Master Nurse refused the application, finding Mr Siza had provided no evidence to support his explanation for the use of the no sale and void buttons.

Further, the defendant’s effort to blame his accountant for the VAT classification of items on the menu was “fanciful”.

Luke Harrison, a partner at Hertfordshire firm Debenhams Ottoway, represented Manolete. He said the judgment was a useful reminder to applicants seeking to set aside judgments that the burden of doing so rested on them.

He continued: “The case also shows the effectiveness of assigning a claim to a third party such as Manolete. The assignment enabled a claim to be brought which would otherwise have been stifled due to lack of funds. The court issue fee alone was £10,000.

“Manolete financed the legal costs and disbursements whilst also providing the insolvency practitioner and the estate with a complete indemnity on Manolete’s own balance sheet at no additional cost to the estate.

“Manolete has achieved a pre-eminent place in the insolvency litigation market and in cases like this gives real fire power to creditors in tackling the wrongdoing of directors.”

A copy of the Judgment is available here.

Innocent of what? by Stephen Baister

In Clint Eastwood’s film, Unforgiven, William Munny, played by Eastwood, travels to Big Whiskey to avenge the disfiguring of a local prostitute and claim a reward put up by her friends and colleagues. The local sheriff, played by Gene Hackman, arrests Munny for carrying a gun. Some of the local prostitutes go to the sheriff to plead for Munny’s release claiming he is innocent. “Innocent of what?” is the sheriff’s sinister reply.

If the presumption of innocence did not apply in the town of Big Whiskey in the 1880s, then it is under attack here and now too: what lawyers call “the golden thread” (articulated in 1935 in a case called Woolmington v DPP) is being steadily eroded by regulation and practice. Let me make that point good by just a few examples from everyday life in the UK.

If you want to open a bank account, the bank will nowadays start from the presumption that you wish to use the account for money laundering. It will require you to produce your passport and a utility bill or similar documents to rebut that presumption. If you want to instruct a solicitor or accountant you will be treated in the same way, even though you may have known the person you intend to instruct for 20 years or more.

If you want to undertake work as a volunteer for certain charities, they too must now start from the presumption that you are a convicted offender of some kind. They will increasingly require you to rebut that presumption by undergoing a check carried out by the Disclosure and Barring Service, a government agency that will certify your innocence (or at least the fact that you have not been convicted or barred).

If you move house and do not have a TV you will soon receive a warning letter from the TV Licensing people in effect accusing you of using a TV without a licence, even if you do not have a TV and threatening you with investigation. Again, your guilt will be presumed.

Whilst one can see that in limited cases charities need to protect vulnerable users from predatory employees and volunteers, there is a great deal that can surely be done without requiring innocent citizens who want to do a bit of good to submit themselves to state scrutiny. The idea that money laundering can be prevented by producing a passport and a gas bill is fatuous: it is plainly not beyond the wit of a master criminal to produce these. And when I last checked, we were still free not to own a TV set.

The presumption of guilt is not just objectionable in itself, it is corrosive of ordinary civic and commercial relationships. It is time to roll back the presumption of guilt and get back to a society where we all think the best of one another.

Dr. Stephen Baister
Non-Executive Director

Looking back, it has been an extraordinary year but for all the substantial changes one core principle does not alter. We recognise, on a daily basis, that our strong relationships with IPs and their chosen lawyers is absolutely critical to maximising creditor recoveries. Together, we have delivered huge value to creditors and helped to make Britain a better and fairer place to do business.

All I now need say is to wish you all a very happy and peaceful Christmas and a very rewarding and thriving New Year!

Steven Cooklin,
CEO