Manolete model evolves for 2019: Even more value to insolvent estates

Introduction from Steven Cooklin

2018 was another busy year for Manolete. We worked on many new cases (signing at a rate of almost one new case per week) and completed many at a similar rate – all delivering record value to Insolvent Estates all over the UK.

We believe the combination of great IPs, together with their brilliant external lawyers and supported by our financing, delivers simply unbeatable returns to creditor estates.

A strong and effective TRI community is absolutely vital for the prospects of the UK economy. New inward investment and trade with the UK can only thrive in the future in Britain if investors, lenders, customers and suppliers can be confident in a country’s insolvency and recovery framework.

We are incredibly proud of the tremendous work IPs and insolvency lawyers do and we thank you for allowing us to be part of those herculean efforts.

2019 appears to offer just as an exciting prospect as last year.

Steven Cooklin, ACA ACSI CF
Chief Executive, Manolete Partners PLC

In this issue:

• Larger cash sums up front – the new Manolete model for 2019
• Manolete expands regional presence
• Brewer & Wilson (as joint liquidators of ARY Digital) vs Iqbal by Mena Halton
• Reading The Law by Stephen Baister
• Manolete signs long-term strategic partnership agreements with R3 and ICAEW

Larger cash sums up front
– the new Manolete model for 2019

As many of you will know, 2018 ended with Manolete completing an IPO on the AIM market of the London Stock Exchange. So how will it help your business?

The result is a major new influx of capital, all of which is aimed at supporting your insolvency litigation cases. We currently have a record £30m of finance available.

This has enabled a big change to our financing offers for 2019: far larger initial cash sums up front (whether funding or taking an assignment of your case). We hope this provides a significant contribution to the WIP on the case.

For example, on an overdrawn Directors Loan Account of £100,000 you should expect to receive around £10,000 as soon as we take the assignment of the case (and you still stand to share in at least 50% of the eventual net proceeds once a recovery is made). On a more substantial claim of say £1-2m, the upfront cash payment from Manolete would be around £100,000 (plus an even larger share of the final recovery going to the Estate).

The objective is to bring even more value to insolvent estates.

We also promise:

• We provide adverse cost risk protection completely for free – we simply self-insure, providing you with a no strings indemnity, so no expensive ATE required.
• The IP chooses the solicitor and counsel team to work on the case. There is no ‘approved panel’. All lawyers are paid as the case progresses.
• Simple, fast and free decision process: we should have an offer back to you within a week.

We have now invested in over 275 UK insolvency claims and 60% of our cases are with repeat IP clients – a strong testament: once IPs and their solicitors have used the Manolete products, they have always come back with further case opportunities.

We look at the merits of the case not its size. Our minimum claim size is still just £20k and our listing on the London Stock Exchange now provides us with almost unlimited access to capital – so any size claim can now be accommodated.

Manolete expands regional presence

Since May 2018, we have started the build-out of our regional team across the UK beginning with the appointment of Dominic Vincent based in Manchester, covering the NW region. Charlotte May joined us in December and Neil Stewart joined in January this year.

We have found that meeting one-to-one with IPs and their chosen legal teams is a very effective way of identifying likely cases for our mutual benefit.

All of our Regional Associate Directors are very highly qualified insolvency litigation lawyers at or around Partner level. Click here to meet the team

Dominic Vincent (NW)

Dominic Vincent joined us in May 2018 and leads Manolete North West. In private practice he was a partner with Weightmans Solicitors and most recently helped establish the legal practice of a national insolvency and restructuring group.

Charlotte May (SW and Wales)

Charlotte May joined in December 2018 and leads Manolete predominantly in the South West. She qualified as a solicitor in 2009 and joined Manolete from national firm Burges Salmon LLP where she worked on high profile retail and property insolvencies. Charlotte plays an active role also for R3 in her region.

Neil Stewart (South)

Neil Stewart is based in the South of England joining the Manolete team in January. He is an experienced advocate who previously worked for Versiona Law Solicitors. Neil has considerable experience of working on complex, frequently multi-party litigation. He is an accredited mediator, an R3 council member and has lectured widely on insolvency matters.

Michael Lynch (London)

Michael Lynch joined Manolete’s London team in January 2019. Michael’s focus has always been contentious insolvency. Since qualifying in 2009, Michael has worked on numerous reported insolvency cases. He is an experienced insolvency litigator, starting his career in Birmingham and more recently for Mishcon de Reya.

Rachel Grant (Scotland, from 7 May).

Judge Baister, Lee Manning and Peter Bertram join the Manolete Board of Directors

We are delighted to confirm that on IPO, Judge Stephen Baister moved up to become a Non-Executive Director on the Manolete Board. Stephen started working with Manolete in September 2017. Stephen offers a unique degree of expertise on insolvency law and his contribution to Manolete is extremely valuable. (See Stephen’s article ‘Reading The Law’ below).

Lee Manning joined the board at the same time as Stephen in November. As a past- President of R3 and a former Partner of Deloitte in London, Lee is well-known to most in the TRI community. Lee and Stephen’s presence on the board ensures that we are constantly kept informed of developments in, and the requirements of, our solicitor, barrister and Insolvency Practitioner stakeholder partners.

Peter Bertram joined Manolete in November 2018 as independent Non-Executive Chairman. Peter has held a variety of senior non-executive positions in public companies in security, IT and media. Peter is a Fellow of the Institute of Chartered Accountants and a Companion of the Chartered Management Institute.

Summary of reported case funded by Manolete for RSM UK

(Brewer & Wilson (as Joint Liquidators of ARY Digital UK Ltd) v Iqbal [2019] EWHC 182 (C)

On 11 February 2019 Chief ICC Judge Briggs handed down judgment in this matter where the successful Applicant joint liquidators were funded by Manolete Partners Plc.

The liquidators claimed that the Respondent, Mr Iqbal, had been negligent or acted in breach of his equitable duty of care or otherwise acted in breach of duty to obtain the best price for assets of ARY Digital UK Ltd (the “Company”) when acting as administrator.

The Company carried on business as a broadcaster, operating 3 channels. To facilitate the broadcasts, the Company acquired Electronic Programming Guides (“EPGs”) by agreement with British Sky Broadcasting Ltd. By April 2011 the Company was insolvent, Mr Iqbal was introduced to the Company in mid to late April 2011 and these discussions led him to believe that the Company would file for administration. Mr Iqbal contacted Edward Symonns about valuing and selling the Company’s assets on or about 19 April 2011 and was appointed as advisor to the Company in or around 6 May 2011. On 19 May 2011 Mr Iqbal filed a notice of intention to appoint administrator on behalf of the Company. On 20 May 2011 Mr Iqbal instructed Edward Symonns to sell the Company’s assets, made a reference to £40,000 agreed with the current management in respect of the EPGs, and stated that if no interest was shown by any third party he would like to conclude the sale on or before 27 May 2011. An advertisement was posted on Edward Symmons website on 20 May 2011 under the heading “Machinery Sales”. The Company’s assets were sold to a connected company, ARY Network Ltd, on 27 May 2011 for £57,000 plus VAT and the sum of £40,000 plus VAT was attributed to the EPGs.

The Judge held that Mr Iqbal had placed too much reliance on the directors to provide a value for the EPGs, approval of the marketing and the timing of the sale and that he had failed to exercise reasonable care and skill in the following respects:

• Failure to obtain a proper valuation prior to sale
• Failure to understand the nature of the asset, the true value of the EPGs and the potential to negotiate with a specialist purchaser which led to the misplacement of an advertisement.
• Taking into account the interests of the connected company, ARY Network Ltd and failing to take account of exposing the assets to a specialist market for a reasonable period.
• Failing to make proper enquiries into the market for EPGs or ignoring such enquiries
• Failing to take specialist advice for a personal in the EPG industry, to advertise in publications or websites to attract purchasers of EPGs (and not plant and machinery) for a reasonable period of time.
• In terms of Mr Iqbal’s fiduciary duties, the Judge expanded on v) above and further referred to Mr Iqbal’s admitted failure to act with “single minded” loyalty to the Company as he was also acting in the interests of ARY Network Ltd. The Judge held that Mr Iqbal failed to take account of matters he should have when deciding on the sale of the EPGs, namely the interests of creditors and took account of matters he should not have.

The Judge found that Mr Iqbal failed in his duty of care and was in breach of his fiduciary duties. The liquidators elected to seek a remedy resulting from breach of fiduciary duty, and common law principles of foreseeability and remoteness do not apply to equitable compensation. As the remedy for a breach of fiduciary duty is usually one of an account, the loss is assessed at the date of judgment rather than the date of breach. The Judge assessed the current value of the EPGs and, taking into account an appropriate discount for relevant factors, concluded that £743,750 represents equitable compensation for the breaches of equitable duty. An order was made for payment of £743,750 plus costs.

It is unusual for Manolete to support a claim against an IP, but the conduct in this case was such that compensation to the estate was appropriate and, absent Manolete funding, the legal costs and the costs of both IP and valuation expert witnesses could not have been met. It was not a case of inviting the Court to interfere with commercial decisions with the benefit of hindsight, but the sale of company assets to a connected party without taking the necessary advice on valuation and marketing.

Mena Halton
Head of Legal, Manolete Partners PLC

Reading The Law

Stephen Baister

Law books can make turgid reading. Academic legal writing can be even worse. Just try reading some of the stuff produced by the critical legal studies movement or some of the bilge incorporating “mathematical” formulae or equations purporting to explain legal economics or decision making in quasi-scientific terms. A lot of it brings to mind Jean Bricmont and Alan Sokal’s Intellectual Impostures (1998). Two real scientists produced an unintelligible article full of bogus theory and phony science and managed to get it published in an academic journal called Social Text only to reveal afterwards that it was a hoax. The title might have contained its own health warning to anyone with a modicum of sense: “Transgressing the Boundaries: Towards a Transformative Hermeneutics of Quantum Gravity”, but not to the postmodernist intellectual imposters who were fooled by it – and by implication, by so much more, including, perhaps, themselves.

Much later, enter Lord Hoffmann – on the side of the angels, as usual.

For the benefit of non-nerd readers, there has been a spat between Lord Hoffmann, the retired law lord, and Lord Sumption, who still sits. It is all about contractual interpretation. In a nutshell, Hoffmann said in a 1998 case called Investors Compensation Scheme Ltd v West Bromwich Building Society, still a leading case in the area, that the key question in interpreting contracts was what a reasonable person would understand the parties to have intended by their contract, even if this was something different to the ordinary meaning of the words they had used. Lord Sumption, however, argues that that is wrong: the courts must give primacy to the meaning of the words. Both Hoffmann and Sumption were academics before they were judges: Hoffmann taught law, Sumption was, and still is, a historian.

Hoffmann’s riposte to Sumption’s recent critique of his views came last year in the form of an article entitled “Language and Lawyers” which appeared in the Law Quarterly Review in October last year. It represents all that is good about legal and academic writing: the prose is clear and easy to understand; the examples and analogies are illuminating; the arguments are developed with care and elegance. Hoffmann, now 84, still shines and can still teach all of us a thing or two, not just about the law but about language as well.

Dr. Stephen Baister
Non-Executive Director, Manolete Partners PLC

Manolete signs long-term strategic partnerships with R3 and ICAEW

Within the last few weeks we were pleased to conclude key long-term strategic partnership agreements with R3 and also the ICAEW Insolvency Community. Both agreements cover an initial three-year term and allow us to support all the major national and regional conferences being run by these two prestigious organisations throughout the period. Both R3 and the ICAEW play an important role in the TRI community delivering training, important technical updates, PR and lobbying and networking opportunities for members.
We are honoured to be able to continue our support of their dedicated work.

Contacts
Steven Cooklin, CEO
Tel: 0203 ​859 ​3490
steven@manolete-partners.com

Mena Halton, Head of Legal
Tel: 0203 ​859 ​3495
mena@manolete-partners.com