Failed claims management company Rebus has handed over its entire book of claims against financial advisers to a law firm for £100,000.
The Law Practice (TLP) agreed to buy the collapsed firm’s client contracts to pursue hundreds of outstanding claims.
An administrator’s report dated 2 April revealed TLP must pay Rebus half of the gross profit it earns from the claims.
Seven offers had been recieved for parts of the business, and the administrator said the sale to TLP offered the best return for the creditors of Rebus.
According to a notice on Rebus’s website, which appeared in February and was quickly taken down, about 1,700 clients stood to lose a total of £930m.
The company collapsed after it took on complicated cases against advisers for an upfront fee and struggled to recoup money for clients due to the long lead time of the claims and the insolvency of some of the advice firms.
Rebus concentrated on investors seek redress for failings over negligent advice given by IFAs, and was particularly interested in complex cases involving tax avoidance.
The claims management company expected clients to recover losses from the advisers’ professional indemnity insurers.
In February, Mark Osgood, partner at law firm Moore Blatch, said Rebus clients typically stand to lose £100,000 each if their cases miss the six-year limitation cut off.
Resolve Partners was appointed as administrator for Rebus Management Services, Rebus Investment Group and Rebus Investment Solutions in January.
Five Rebus employees were made redundant immediately after the appointment of Resolve, with the remainder kept on to service existing clients.
When TLP agreed to purchase the client books on 23 February, the remaining 10 members of staff were also made redundant.
Last year Rebus took to crowdfunding to help raise cash, with 100 investors ploughing more than £800,000 through Crowdcube.
However, the crowdfunding investors also stands to lose out as negotiations for a buyer broke down, meaning Rebus was unable to continue trading.
Paul Harris, managing director of TLP, said he was having to take a great deal of care with clients because many have either been given bad advice or their cases have been neglected by Rebus.
He said ReSolve wanted a solicitors practice which could “immediately give the necessary levels of client care and expertise” and be able to meet the “stringent” time limits on recovering client damages to ensure the claims are secure.
Speaking broadly about the claims management companies, Gareth Fatchett director at Regulatory Legal Solicitors, said many find it difficult to make enough money out of mis-selling claims as they try to move on from payment protection insurance (PPI) complaints.
Colin Low, managing director of Kingsfleet Wealth, said: “Where does it all end? Will the Crowdfunders want to litigate against Rebus? What about their clients? Who can they sue?
“Unfortunately, I can’t see an end to this unless some form of caveat emptor legislation is specifically implemented. However, which political party would be able to do that?”