Received a Manolete Pre-action Letter?

If you have received a pre-action letter and are therefore facing legal action from liquidators funded by Manolete Partners Plc or another litigation funder, it is essential to seek expert legal representation. We specialise in defending clients against such claims. Our team has in-depth knowledge of the tactics employed by these funders, offering you unparalleled legal support in this highly specialised area of law. We understand the challenges of defending sophisticated and aggressive litigation strategies and our experienced solicitors and barristers committed to providing robust defence and resolution strategies to protect your interests. Here’s why LEXLAW is a strong choice to defend a claim from Manolete Partners Plc:

• Expertise in Litigation: LEXLAW specialises in high-value litigation and complex claims, with extensive experience in handling multi-million pound cases.
• Track Record: The firm has a very high settlement rate before trial, as we are effective in resolving disputes efficiently.
• Reputation: We have been recognised as one of the fastest-growing law firms in the UK and have appeared regularly in relation to our litigation matters in UK and International news and print media.
• Experience Against Major Opponents: LEXLAW has regularly succeeded against ‘magic circle’ and other prominent legal teams, which is relevant as Manolete Partners Plc is a significant player in insolvency litigation.
• Specialised Knowledge: LEXLAW has expertise in areas relevant to potential Manolete claims, including insolvency, fraud, commercial contracts, and directors’ loans and disqualification.
• Client Satisfaction: Multiple positive client testimonials highlight LEXLAW’s ability to handle complex cases, including successfully dismissing HMRC winding-up petitions and helping companies survive difficult situations.
• Strategic Approach: We undertake careful case analysis, risk assessment, and negotiation skills to achieve optimal outcomes for clients.
• Dual-Qualified Team: The firm employs both solicitors and barristers, providing a comprehensive legal perspective that is advantageous in complex litigation.

We have extensive experience and expertise in defending insolvency claims brought by liquidators and litigation funders, setting us apart from many other solicitors. Our team has in-depth knowledge in handling complex, contested insolvency cases, particularly those involving litigation funders like Manolete Partners. The firm’s track record includes successfully challenging high-profile cases and the status quo. We offer a strategic, partner-led approach to navigate the intricacies of these disputes, ensuring robust representation for clients facing litigation from well-funded adversaries.

What is Litigation Funding?

Litigation funding, also known as Third Party Funding or Litigation Finance, involves a third-party funder providing financial support for a legal dispute in exchange for a share of the proceeds if the case is successful. This arrangement allows liquidators who do not have the financial means to pursue legal action to access and fund litigation.

In recent years, insolvency practitioners have increasingly been selling claims to litigation funders, including Manolete Partners. These funders acquire claims for relatively low sums from liquidators or administrators and then pursue litigation against the directors of insolvent companies, aiming to secure large financial returns. The complexities and pressures of defending such claims are significant, especially when facing well-resourced teams and sophisticated legal tactics.

We provide advice and representation in proceedings against litigation funders like Manolete, providing you with the expert legal representation you need to protect your rights and achieve the optimal outcome in your case.

Who is Manolete Partners?

Manolete Partners PLC is the UK’s leading insolvency litigation funding company, specialising in pursuing insolvency-related claims. Their model involves purchasing claims from liquidators or administrators—often at a minimal cost—and pursuing litigation against directors of insolvent businesses to extract substantial financial returns. While Manolete positions itself as a supporter of corporate creditors, its aggressive legal strategies are designed to maximise its return on investment and this often place individual former directors under immense financial and legal strain.

• Business Model: Manolete funds or purchases insolvency claims, working directly with Insolvency Practitioners (IPs) and their solicitors to maximize returns for creditors.
• Expertise: The company has completed over 680 specialist insolvency cases and has over 350 live cases.
• Financial Strength: Manolete floated on the London Stock Exchange (AIM) in 2018, providing financial backing for claims.
• Industry Recognition: The firm has won the TRI award for ‘Insolvency Litigation Funder of the Year’ five times.

With over 1,000 total claims and £152 million recovered as of 2024, Manolete’s growing influence and scale pose increasing challenges for directors facing insolvency litigation. Their legal teams are adept at pursuing claims in ways that often leave defendants at a significant disadvantage—particularly if they lack the necessary legal expertise to mount an effective defence.

What Types of Claims do Manolete Pursue?

The Manolete method is a structured approach to insolvency litigation funding that involves several key steps. It begins with Insolvency Practitioners (IPs) or their lawyers contacting Manolete to discuss potential cases for funding or purchase. After reviewing the claim summary and key evidence, Manolete conducts an assessment and decides whether to finance the case. If approved, the parties sign a standard purchase or funding agreement, which includes full indemnity coverage for all costs. The legal process then commences, often starting with a pre-action letter to the opposing party.

Common Manolete claim types:

• Overdrawn Directors’ Loan Accounts
• Unlawful Dividends
• Breach of Contract
• Misfeasance/Breach of Duty
• Wrongful Trading (Section 214 of the Insolvency Act 1986)
• Transactions at Undervalue (Section 238 of The Insolvency Act)
• Preferences (Section 239 of The Insolvency Act 1986)

Throughout the litigation process, the IP remains involved, and their chosen lawyers handle the case. Those lawyers often routinely work on Manolete claims. The claims usually conclude with either a settlement or a judgment at trial.

In terms of the financial aspects, Manolete usually provides full indemnity, covering all litigation costs including adverse litigation costs. They also offer upfront cash payments to IPs and finance further investigation work. The creditor estates typically receive at least 50% of final net returns.

Defending Manolete Partners Claims

As Manolete Partners Plc continues to aggressively pursue insolvency-related claims, it’s crucial for directors and companies to understand effective defence strategies. Here are the key approaches to consider together with experienced legal advisers:

Challenge the Claim’s Validity	Thoroughly examine the basis of Manolete’s claim. Determine and exploit potential weaknesses or defences specific to the type of claim being pursued.
Engage in Alternative Dispute Resolution (ADR)	Manolete engages in ADR, and the majority of their cases are resolved through methods like mediation. You should instruct legal professionals to represent you in early resolution strategies in order to potentially reach a swift and cost-effective resolution.
Scrutinise Financial Evidence	Pay close attention to financial records and challenge any assumptions about insolvency or the company’s financial state at the time of the alleged wrongdoing. This is particularly important in cases involving wrongful trading or transactions at undervalue.
Utilise Limitation Arguments	Be aware of limitation periods and raise them where applicable. Manolete has faced challenges on this front in the past, and given the Limitation Act 1980, it’s a strategy worth considering.
Demonstrate Good Faith	For claims like wrongful trading, show that you acted responsibly and in good faith, considering all available information at the time. This can be a strong defence against such allegations of misconduct.
Challenge the Assignment	While recent court decisions have made this more difficult, and Manolete are well-versed in assignment validity in some cases it may still be worth challenging the validity of the claim assignment to Manolete.
Focus on the Merits of the Case	Avoid getting side-tracked by challenging Manolete’s involvement. Instead, concentrate on building a robust defence against the substance of the claim.
Consider Security for Costs	While Manolete boasts that no defendant has successfully obtained an order for security for costs against them, it may still be worth exploring this option in certain cases.

Remember, each case is unique, and the specific defence strategy should be tailored to the individual circumstances of the claim and the defendant’s situation. Seeking experienced legal counsel with a track record of defending against Manolete claims is critical. By instructing solicitors that understand Manolete’s tactics and preparing a strong defence pleading, directors and companies can better position themselves to challenge these claims and protect their interests.

Need Representation to Defend Against Claims from Manolete Partners?

We have extensive experience in defending claims from litigation funders. Our team of expert solicitors understands the nuances of contested insolvency claims and the complex tactics often employed by funders in these cases. With our assistance, you can ensure your interests are protected and increase your chances of securing a favourable outcome.

We are one of the few firms in the UK with the expertise to handle such complex cases. If you are facing litigation from Manolete or any other litigation funder, contact us today. Our seasoned legal professionals will provide you with strategic advice to help defend your position and mitigate any potential liabilities.

Is Litigation Funding Legal in the UK?

Yes, litigation funding is legal in the UK and has become an essential aspect of the legal landscape over the past 30 years. It is meant to provide access to justice for individuals and businesses who might otherwise be unable to afford the often-prohibitive costs of legal action. This form of funding has proven particularly valuable in class actions and large commercial disputes, offering an avenue for those without the means to pursue legal claims.

However, litigation funding was once limited by common law doctrines such as maintenance and champerty, designed to prevent the exploitation of the legal system by wealthy individuals funding unmeritorious claims. While these restrictions have been largely relaxed, litigation funding is now regulated and lawful in the UK, allowing litigation funders such as Manolete to engage in the practice within certain parameters.

The UK Litigation Funding Market

The UK has one of the most established litigation funding markets globally, valued at between £1.5 billion and £4.5 billion in 2023. With projections indicating continued growth, the demand for litigation funding is driven by factors such as rising legal costs, increased awareness of funding options, and substantial institutional investment in the sector.

While the market is thriving, it has given rise to increasing concerns over the aggressive tactics employed by litigation funders, such as Manolete Partners. These companies purchase claims at minimal cost and then pursue litigation with the aim of extracting significant financial returns. Although litigation funding itself is legal, the practices of these funders can place individuals and businesses under immense pressure, especially when they are faced with sophisticated legal strategies and well-resourced teams.

Key Litigation Funding Legal Decisions

Several landmark rulings have shaped the landscape of litigation funding in the UK. These decisions include:

• Liability for Costs: In the seminal case of Arkin v Bochard Lines [2005] EWCA Civ 655, the court held that a litigation funder who finances part of a litigant’s costs should be liable for the opposing party’s costs to the extent of the funding provided. This became known as the “Arkin cap”. However, in the more recent case of Davey v Money [2019] EWHC 997 (Ch), the court decided not to apply the Arkin cap, awarding indemnity costs against the funder instead. This shift reflects the evolving nature of the litigation funding industry.
• Security for Costs: In Rowe v Ingenious Media Holdings PLC [2020] EWHC 235 (Ch) under certain circumstances, the courts have ordered litigation funders to provide security for costs, ensuring that the funded party can cover the costs of the litigation if they lose.
• Disclosure: In Akhmedova v Akhmedova [2021] EWHC 545 (Fam), the court clarified that there is no obligation to disclose a litigation funding agreement (LFA) in High Court litigation. However, this differs in the Competition Appeal Tribunal (CAT), where LFAs are reviewed before certifying a representative to act on behalf of a class in opt-out collective actions.
• Damages-Based Agreements: On 26 July 2023, the UK Supreme Court in R v Competition Appeal Tribunal and Others [2023] UKSC 28 ruled that litigation funding agreements (LFAs), where funders are entitled to a share of damages recovered, qualify as Damages-Based Agreements (DBAs). This ruling has profound implications for the funding industry, particularly as DBAs are prohibited in opt-out collective actions under the Competition Act 1998. The decision has rendered many LFAs unlawful or unenforceable unless they comply with the 2013 DBA regulations.

Expert Legal Representation against Claims Brought By Manolete Partners

Our expert team is highly experienced in defending claims brought by litigation funders such as Manolete Partners. With a deep understanding of the complex nature of litigation funding, we offer strategic, robust legal support to protect your interests. Our solicitors have a proven track record of successfully challenging claims in insolvency and other contentious matters, providing you with tailored solutions to navigate the pressures and complexities of litigation funding. Whether you are facing legal action from Manolete or another litigation funder, we will work closely with you to develop a strong defence and achieve the best possible outcome for your case.