Plexus Law files intention to appoint administrator
UK insurance firm has been grappling with "impact of serious financial irregularities" discovered in 2019
UK defendant insurance law firm Plexus has filed a notice of its intention to appoint an administrator after investors decided not to put more money into the business.
The move comes just days after the Leeds-based firm confirmed talks with investors to inject emergency funds, reportedly in the region of £5m had broken down.
Last week (1 June) the firm said that it was looking to raise fresh funds from a new investor, including through a sale or merger of part or all of the business with another firm.
Filing an intention to appoint an administrator gives Plexus, which employs around 700 people across seven UK offices, a short period of protection from other attempts to wind down the business and the opportunity to find a solution.
The firm's 2021-22 accounts are currently overdue, according to Companies House. Its accounts for the year to 31 March 2021 report turnover of £48.9m, down 14% on the previous year, while profit before members’ remuneration and profit shares fell from £4.9m to £1.8m.
The firm had a £15m investment from Origin Equity in 2019, having returned to the ownership of its founders four years earlier when private equity-owned law firm Parabis Group - of which it had been a part - went into administration.
Plexus said in a statement last week (1 June) that it had secured additional funding from its investors in March 2023, which was needed “due to the ongoing impact of serious financial irregularities discovered by management after Plexus was acquired in 2019”.
The discovery meant that the 2019-20 accounts revised figures for the previous year downward, including revenue by £1.4m to £56.6m and profit by almost £2m to £9.1m.
The statement continued: “The terms of the new investment were subject to a number of conditions. Unfortunately, after a period of negotiation, we have been unable to broker the necessary agreements to meet all of those conditions.
“As a result, investor support has been withdrawn. Up until this point, the business’ underlying trading has been running in line with its forecast.”
Plexus is one of the largest firms in its field, handling more than 50 public sector clients and working with four of the top 10 motor insurers. In its statement the firm thanked its employees and said it was committed to maintaining high standards of client service “throughout this current process”.
The firm is being advised by restructuring specialists Interpath and Macfarlanes, which said it could not disclose the names of its lawyers working on the matter.
News of Plexus’ court filing follows listed UK law firm Ince announcing in April it was intending to call in administrators in a bid to secure its sale. The move came after a lengthy period of turbulence for the group, which ran into financial difficulties during the Covid-19 pandemic and whose shares have been suspended since 3 January due to repeated delays in the publication of its annual report for the financial year ending 31 March 2022.