...and preferred creditors will receive only 8.2p for each £1 owed
Insurers exposed to the collapse of no-win, no-fee firm The Accident Group (TAG) are unlikely to recover any of their losses, according to the failed company's administrator.
GoshawK, Allianz Cornhill, NIG, Atrium and Catlin Underwriting Agencies are among the insurers who underwrote policies for TAG customers which covered their court costs in the event that their cases failed. Accountancy firm Pricewaterhouse-
Coopers (PWC) was appointed to oversee the administration of TAG on 30 May this year.
At a creditors meeting in Manchester on 14 August it was revealed that preferred creditors of TAG are owed a total of £14.4m, but only £1.1m is available to pay all creditors. Preferred creditors, including the Inland Revenue, which is owed £11m, will receive only 8.2p for every £1 owed and unsecured creditors, including insurers, are unlikely to receive anything.
The administrators will investigate a number of claims against TAG, including allegations that the company's vetting procedures failed to weed out cases that were fraudulent or likely to fail. It has emerged that rather than the 59% success rate expected, recent data shows TAG was successful only in 50% of cases.
Based on these allegations, a number of the insurers are considering legal action against TAG, but a spokesman for Catlin said that no decision on legal action had been made. A spokeswoman for Allianz Cornhill said that rather than taking legal action, the insurer planned to focus its attention on its chances of recouping its losses through the administration process.
It has emerged that prior to the administration, TAG founder and chairman Mark Langford attempted to restructure and find new funding for the company. Pizza Express entrepreneur Hugh Osmond, HBOS, South African private equity vehicle Capricorn and investment bank Morgan Stanley were among the parties that Langford was in negotiation with.