Leading litigation loan provider owes lender £ 43million, directors reveal

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Administration: Orderly liquidation is the best option for the donor

Affiniti Finance – which has loaned money to thousands of law firm clients – went into receivership late last year after a breakdown in the relationship with its ultimate funder, which is to now £ 43million, she emerged.

The directors’ recently released report, Quantuma, said it was not possible for Affinit to continue in business, leaving an “orderly liquidation process” the best option for creditors.

Chester-based Affiniti has loaned customers money through Consumer Credit Act agreements to fund their out-of-pocket personal injury and abuse-selling claims.

Quantuma said the company had also provided a number of “direct law firm loans” regarding certain matters that were not considered appropriate for such agreements.

“The company’s loan facilities are being reviewed with the various law firms through audits and this is still ongoing,” the report said.

The business was doing well – draft accounts for the fiscal year ended October 31, 2021 recorded revenue of £ 9.9million, nearly double the previous year, and a profit of £ 3.3million, nearly triple.

However, Quantuma explained that “a series of events occurred, over an extended period of time, which caused the company to default on its obligations under a loan agreement with its secured creditor and finance provider, Fortress Capital “.

Affiniti was dependent on this funding and following the breakdown of the relationship Fortress decided not to advance any further funds for new loans and instead demanded repayment of the £ 43million she had loaned.

Affiniti couldn’t do it, and Fortress asked Quantuma.

The report stated that, “for both regulatory and financial reasons,” Affiniti could not continue to negotiate and underwrite new business, meaning it could not be saved as a going concern.

He continued, “The joint administrators believe that the administration will facilitate the process of auditing and understanding the company’s loan portfolio so that it can be collected in an orderly liquidation process using existing staff and staff. business operations in a more orderly manner than would be achieved in a liquidation scenario.

Quantuma said the value of Affiniti’s loan portfolio for the month ended October 31, 2021 was just over £ 30million. Some £ 173,000 was raised between November 4, the date of his appointment, and December 29. “The expected value of the total future collections is uncertain, but funds are received regularly. “

Trustees said they expected there would be enough funds to make a distribution to senior creditors – Staff (owed £ 8,249) and HM Revenue & Customs (£ 214,351) – and “there could be” enough to pay a dividend to unsecured creditors as well. . Trade creditors are owed £ 936,000.

Quantuma expects its fees to rise to £ 850,000, with an additional £ 675,000 spent on lawyers and £ 100,000 on case audits.

In September 2020, Affiniti said he was planning a major expansion after a £ 250million capital raise backed by what he described as a “multibillion-dollar” US fund, but declined to name .

At the time, Affiniti had invested in more than 5,000 litigation cases, but said it expects that number to increase tenfold by the end of 2021.

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