Din: Considerable value in Novum’s files
National firm Simpson Millar has rescued personal injury practice Novum Law out of administration, with the funder that owns the former also a creditor of the latter.
But Steve Din, the founder of Doorway Capital, stressed that it was an independent decision to choose his offer as opposed to the other apparent option considered of distributing Novum’s cases to the Recovery First panel.
Novum Law is part of NHLex Ltd, which also owns Hyphen Law, a firm which specialises in Court of Protection work. Two of Hyphen’s partners and some of their team have joined another national firm, Hugh James.
According to NHLex’s most recent accounts, for the year to 30 April 2022, it had a turnover of £6m, down from £6.7m the year before, turning an operating profit of £776,000 into a loss of £835,000.
Director Mark Cullingford wrote that it had faced challenges from intense competition in the PI market, as well as pandemic-related court delays involving some large cases.
Both firms spun out of West Country firm Thrings a decade ago, and NHLex and Thrings have several common directors, including Mr Cullingford.
Indeed, according to the accounts, Thrings had an outstanding loan then worth £2m secured by way of fixed and floating charges against all of the assets of the company.
The accounts said that, after the reporting period, NHLex had “entered into a period of agreed forbearance in debt repayment with one of its secured creditors” and also negotiated a ‘time to pay’ arrangement with HM Revenue & Customs.
But the tax authority served NHLex with a winding-up petition last month, which it did not have the funds to pay, and the company obtained a validation order to allow it to keep trading.
As a result of the sale by administrators Stephen Katz and Asher Miller of Begbies Traynor Group, 14 lawyers are moving over to Simpson Millar, bolstering its serious injury, clinical negligence and industrial disease departments.
As at 30 April 2022, Doorway Capital was owed £1.3m. Mr Din said Doorway, in addition to being repaid in full – as Simpson Millar has agreed to take on “certain liabilities”, including the debt to Doorway – pre-funded £250,000 of administration expenses to ensure the administrators and their advisors were paid.
He said the decision to sell was taken by the administrators independently but speculated that the commitment to also take on all staff, payroll obligations, archiving and professional indemnity insurance liability and become the successor practice, was what “swung it in our favour”.
With a conventional pre-pack, just the files and assets are transferred, with the debts and other liabilities remaining with the insolvent firm. As a result of this deal, NHLex’s other creditors could see a higher level of recovery than they otherwise would.
Mr Din added that there was “considerable value” in Novum’s files, receivables and disbursements, and that he would have continued to fund them even if they had gone to other firms.
Simpson Millar chief executive Greg Cox welcomed his new colleagues, saying: “We know that although some firms in our part of the sector are thriving, many others are facing challenges from the impact of change like fixed costs, court delays and similar.”
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