Manolete Partners performs 'well' despite UK insolvency measures

Insolvency litigation financing company Manolete Partners said it performed “well” in its first half on Wednesday, despite the period covering the final six months of the UK government’s temporary Covid-19 measures under the Corporate Insolvency and Governance Act 2020.

The AIM-traded firm said 64 cases were completed in the six months ended 30 September, which was 23% higher than the 52 case completions in the first half of the prior 2021 financial year.

Those 64 cases were settled for an aggregate settlement value of £7.9m.

It said the average duration of the 64 cases from the date of signing the investment agreement to the date the case was legally settled was 11.5 months, which was in line with the company's long-term average.

Its return on investment for the cases was 157%, representing a money multiple of 2.57x, meaning that for every £1 Manolete invested, it returned £2.57.

A total of 255 new UK insolvency case enquiries were received, which was 5% higher than the previous six months, but 24% below the first half of the prior year, which was affected “far less” by the government’s temporary measures.

In the half-year, 78 new case investments were made, which was 11% lower than the previous six months, which the board said underlined its “high standards of rigorous case assessment”, and 29% below the first half of the 2021 financial year.

A total of £4.3m of cash was received from previously-completed cases.

Manolete said 50 new UK insolvency case enquiries were received in September, which was the highest level since July last year.

The firm said it started the second half of its financial year with 262 live cases in progress, adding that as at 30 September, it had drawn down £11m from its £25m three-year revolving credit facility with HSBC.

“The Manolete business has performed admirably despite the extraordinary temporary measures enacted by the UK government designed to suppress UK insolvencies and to support UK employment levels,” said chief executive officer Steven Cooklin.

“Effective from the start of this month, those measures have now very largely ended with a return to broadly normal insolvency processes.

“As can be seen from the data released by the UK Insolvency Service, the number of monthly creditors voluntary liquidations had already bounced back to pre-pandemic levels for each of the last four months.”

Cooklin said there was always a time lag between an insolvency appointment, investigation work being done by the insolvency practitioner, and then cases being referred to Manolete, but he said the firm was now starting to see an increased number of insolvency appointments being reflected in its key performance indicators, with September seeing the highest level of new case enquiries being received since July 2020.

“We also witnessed a strong recovery in our numbers of new signed cases at 15 for that month, 50% higher than the previous month.

“Even with this sharp upturn these KPIs are still far below the level we were experiencing before the government instigated the necessary economic support measures so we anticipate further strong growth in the number of signed cases in the months ahead.

“With a return to largely normal UK insolvency processes from 1 October, Manolete is well-positioned to benefit from that and the likely, widely predicted, increase in insolvency appointments as the economy realigns from the effects of the pandemic.”

Manolete said its half-year results for the six months ended 30 September would be announced in November.

At 1100 BST, shares in Manolete Partners were up 0.16% at 308p.