A litigation funding company that raised approximately £26.5 million from investors has collapsed into administration, highlighting growing concerns in the sector about investor protections and asset recovery. Fenchurch Legal, established in 2020, secured funds from investors, including loan note holders, to finance law firms handling high-volume cases such as car finance mis-selling claims.
Administrators were appointed in April, a year after Lowry Trading—a major investor and former Conservative Party donor—applied to the High Court over a dispute involving unpaid debts. Subsequently, seven firms within the Fenchurch group, structured as special purpose vehicles (SPVs) that received investor funds and reportedly transferred these to Fenchurch Legal, also entered administration.
According to a director’s statement of affairs, the company’s loan book was valued at £26.5 million, though the recoverable sum remains unclear. The appointed administrator from BV Corporate Recovery & Insolvency Services indicated that a significant portion of the loan book had been transferred to subsidiary companies immediately before their appointment. Furthermore, shares in seven subsidiaries changed hands the day prior to the administrator’s involvement, resulting in a notable reduction in value available to creditors, even before considering encumbrances such as charges and pledges linked to third-party lenders.
Louisa Klouda, 31, was listed as the company director at the time of administration. Efforts to reach her for comment have not been successful.
Sir Ranil Jayawardena, former Conservative deputy chairman, ex-minister, and member of parliament for North East Hampshire until 2024, served briefly as an external advisor to Fenchurch Legal from late 2024 until January 2025. There is no indication of any wrongdoing on his part.
In May, the administrator reportedly sold the loan book, records, recovery claims, and shares in the SPVs to Lowry Trading. However, a separate report published last month by Quantuma Advisory, which was appointed to manage three of the SPVs in June, found no evidence of valid security interests held by loan note holders. The report stated that despite a security agent being appointed, the companies did not possess assets backing the security claims. Instead, their only assets were unsecured debts owed by Fenchurch Legal and any remaining cash in their bank accounts. No registered security over Fenchurch Legal was documented.
The Financial Conduct Authority (FCA) issued a warning last month concerning loan notes, identifying them as potentially high-risk instruments with characteristics often associated with scams. This cautionary stance reflects broader regulatory scrutiny over the litigation funding industry and related financial products.