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Pure Legal faces unsecured creditor claims exceeding £40m

Collapse of Pure Legal Leaves Unsecured Creditors Owed £40m – Little Hope of Recovery

The collapse of Pure Legal has left unsecured creditors in a dire situation, with claims exceeding £40m and little hope of ever being paid. The latest administrators’ report reveals the grim reality facing those owed money by the business, with administrators stating that there are unlikely to be sufficient funds to pay anything beyond the prescribed sum.

Legal services lender Novitas is among those owed significant sums, with outstanding loans totaling £1.85m. Additionally, Pure Legal owes £4.6m from a coronavirus business interruption loan and £6.1m to another lender, Perspective. The administrators’ report offers little reassurance that these debts will be repaid in full.

Even preferential creditors, including HM Revenue & Customs and employees owed arrears of pay and holiday pay, face uncertainty about recouping the money owed to them. The administrators warn that there may not be enough funds to pay these debts in full.

The real challenge lies in recovering funds from the thousands of cases Pure Legal was handling at the time of its collapse. While the directors estimated the value of work in progress at around £30m, the administrators anticipate significantly lower recoveries. So far, only a fraction of this amount has been recovered through successful claims or insurance payouts.

The sale of Pure Legal’s investment in Pryers Solicitors was expected to bring in £1m, but financial targets were not met, leaving creditors with little hope of receiving any payment. Meanwhile, the administration itself has already cost nearly £6m in fees and expenses.

As investigations into the company’s affairs continue, creditors are left waiting to see if any actions can be taken against third parties to increase recoveries. The future looks bleak for those owed money by Pure Legal, with little prospect of seeing their debts repaid in full.

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