Manolete Partners Share Discussion Threads

[theborn] 03/8/2022 14:18

Re: "..On a related point.." 50K max (some less) by 30 pending cases, net costs and other hurdles (incl. what there's simply nothing to take from fraudsters) well, there's market from mano in this segment, IMO - not worth it.

In response: CEO Steve Cooklin addressed this in the investor udpate last month. BBL operation would be seperate segment of the business to be run in the 'cookie-cutter' model. New staff would run this (not necessarily expensive lawyers). They are analysing it as a seperate business stream as we speak (apparently). I know that in many BBL cases, a group would set up say 5-10 SPVs and each would take out £50k from various lenders (the due diligence by banks was attrocious). So there will be plenty of cases where the same Director is on the hook for many multiples of £50k, and has the funds to pay it. An initial letter from Mano (who have only ever lost one case, I believe) would likely be enough to prompt a quick settlement.

Let's see. I'm quietly optimistic there is upside on BBLs and we might hear more in the next 6-12 months.

[cfro] 03/8/2022 12:32

Just to say that i only came on here after watching the BBC Six-O'Clock news last night, i know nothing about MANO whatsoever.

My brief understanding is that MANO buy the cases. Does that mean then that if they win they get to keep the size of the BBL ie £50k etc?

I know nothing about how the BBL scheme was initially financed, i assume tax-payers money and not through banks? If so then assuming the above how would the tax-payer get their money back? (Edit - after some digging around i see that they were actually financed by the banks and not Government but are in fact backed by the UK Government).

Think i need to go away and do some research.

[brummy_git] 03/8/2022 11:27

MANO rejects most of the potential cases brought before it, exactly because of the recoverability risk & ability of the defendant to pay.

Due Diligence done upfront

[maddox] 03/8/2022 11:26

Hi BG - agreed.

Hi cfro,

Good challenges - but 25% of the estimated £4.7bn BBL opportunity is still a huge number.

MANO have a fantastic track record of getting the cash from Directors - their bad debt figures are trivial.

[cfro] 03/8/2022 11:12

If MANO then rejects 75% of cases, then that kind of answers my question above, but at the same time i suppose this also narrows the market opportunity for them.

You can see my point that its quite one thing for MANO to technically "win" most of their cases and in these particular cases the defendant may well be able to pay but whether they are willing to pay, is, again something else..

There are a few examples of this with IVA's where cases go back to say 2008 and the monies owed are still being chased today..

My guess is that it might boil down to how much the Government are determined to claw back the BBL's. MANO (and other law firms) will clearly need Government 100% on their side to make it easier imv.

[brummy_git] 03/8/2022 11:07

The other 2 key growth drivers Maddox are:

4) The significant 18 month Insolvency case backlog caused by the pandemic

5) Secular growth of the 3rd party Insolvency Litigation model vs use of traditional IPs

[maddox] 03/8/2022 11:00

To summarise, we have three distinct opportunities for MANO to generate significant returns for shareholders:

>> Core Insolvency Finance: where the volumes are clearly trending above pre-Covid levels; and a further wave of Covid generated insolvencies are predicted;

>> The 22 Truck Cartel Cases: which are proceeding towards a resolution - possibly in the next 12 months; and

>> This new BBL Recovery Opportunity: Unquantifiable at the moment but could be significant.

None of this has dropped into the financials as yet, and so the shares are languishing at 277p. To tempting to resist for me.

[sam55todd] 03/8/2022 10:44

Re:
"..On a related point.."
50K max (some less) by 30 pending cases, net costs and other hurdles (incl. what there's simply nothing to take from fraudsters) well, there's market from mano in this segment, IMO - not worth it.

[maddox] 03/8/2022 10:38

Hi cfro,

This is a key issue for MANO deciding which cases to fund - is there an identifiable Director to go after and do they have the funds to pay any settlement? They have a dedicated team managing this task.

With respect of fraud - if the fraud has been perpetrated using impersonation fraud(aka 'Identity Theft')you're correct - no point in chasing an unidentifiable individual. But I suspect much of the BBL frauds will look a lot like, and possibly overlap with, the insolvency case-types MANO currently handle.

It's difficult to speculate what proportion of BBL cases will be worth pursuing - but there is clearly a lot of cases to evaluate. The ID check is probably the first step - and if it is failed - you don't take the case any further. Eliminating the dud cases early in the process will be essential to efficient processing.

MANO are already adept at selecting the right cases to pursue - they reject 75% of cases they see. So, it's primarily the challenge of creating a scaled operation specifically BBLs and making it efficient and effective.

[cfro] 03/8/2022 09:49

I was watching that BBC news article last night but was wondering, and to some degree questioning, exactly how much of this fraudulent bounce-back money will ever be recuperated?

You can see the opportunity here for these law firms but if they rarely receive the money owed then obviously its pointless. In some cases wouldnt it be like getting blood out of a stone?

In the BBC article they showed one guy - an events organizer - who's business went bust but earlier this year on a trip to Vegas he won a jackpot of £217,000, so he has the money to pay the £50k loan back, but the question is will he...

[theborn] 03/8/2022 09:06

On a related point:

I'd be amazed if Mano do not see a significant inflow of new business with regards to these.

[maddox] 02/8/2022 14:26

Paul Hill of Voxmarkets thinks MANO could do nicely out of the Bounce Back Loan fiasco.

It's actually HM Treasury via the British Business Bank (BBB) that is the underwriter for the BBLs. So true to form the lending banks appear to have done minimal due diligence and given out the loans like confetti thinking they could walk away from any losses. Predictably the losses have wracked-up and the argument about who picks them up - the banks were signed-up to maintain their DD processes not waive them. The extent of the losses - £6bn or so, is highly embarrassing. So, Manolete to the rescue: if they get this right there might be a gong in it for Steven Cooklin CEO.



I've made a few observations myself on this opportunity for MANO:



There is clearly a lot of money to go for here but it will require MANO to develop a different high volume case handling approach. This will be a challenge and probably take time and effort to set-up and optimise the operational model - but MANO are best placed to successfully do this.

[maddox] 19/7/2022 09:43

It's always useful to look at other firms in the Sector - what they are reporting and what their saying on business outlook?

This morning we had Begbies Traynor (BEG) reporting on FY 2022 to 30 April, on outlook:

'The insolvency market (by volume) has returned to pre-pandemic activity levels and is expected to increase further in the current year and beyond. Although to date this increase has been through liquidations (typically smaller companies) rather than administrations (typically larger and more complex instructions), we anticipate administrations will also increase to normal levels over the course of the new financial year.'

BEG as an Insolvency Practitioner is one link further up the chain to MANO so should be in a good position to offer insight.

[maddox] 15/7/2022 12:03

The CVL figures for June have been released - these figures are a leading indicator for cases that will be referred to MANO for litigation financing. This is now the thirteenth month in a row showing a growth trend, and is now firmly trending well above pre-pandemic levels:

'In June 2022 there were 1,456 Creditors’ Voluntary Liquidations (CVLs), 30% higher than in June 2021 and 44% higher than June 2019. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were 3.6 times as many compulsory liquidations in June 2022 as in June 2021, and the number of administrations was 2.3 times higher than a year ago.'



We were trending at 60+% higher than pre-Covid 2019 CVL figs, and we've come in somewhat below that this month. This might be a re-emergence of the summer blip as IPs take their holidays, or a pause after a catch-up in backed-up cases - only time will tell.

Nevertheless, the trend remains intact it's just a matter of the gradient of the trajectory?

Regards Maddox

[melloteam] 04/7/2022 22:59

Just to let shareholders and prospective investors know that Manolete Partners will be presenting on MelloMonday on Monday 11th July at 5pm.

The programme for the evening is as follows:

5pm Welcome and Company presentation by Zoo Digital
5:45pm Michael Taylor: Is it better to be a trader than an investor in the current market?
6pm Company presentation by Manolete
6:40pm Mark Simpson: A portfolio of personality & style
7pm Company presentation by ECP
7:40pm Mello BLISS Competition Update
7:50pm Mello BASH

There will be over 500 investors attending and these are very popular shows with company presentations, fund manager and investor interviews as well as panel sessions.

Tickets are still available and if you would like one at half price then enter the code MMTADVFN50.

[maddox] 29/6/2022 11:42

Hi Sallad,

I take your points - good to kick these issues around to help form an opinion.

Regards Maddox

[sallad3] 29/6/2022 11:09

Maddox

I hear what you say but...

The blah blah says "strong advice of Queens' Counsel" does not accord with the reports of some of the IPs that assigned the cases who say their claims aren't worth more than Mano has already paid.

Mano says it is due to issue its own claims in the next few weeks.

The value is and always has been wholly subjective. It represents 29% of total shareholder equity - that is a humungus amount.

Approach to cartel case valuation:

In reaching a valuation for our cartel cases, we undertook a specific and detailed review process, as follows: we attributed each of our 22 cartel cases into 3 tiers relating to the level of data and evidence held in respect of these cases. In conjunction with an external valuation report from Collyer Bristow and an external opinion of legal prospects from a QC, we applied a discount to the valuation provided by Collyer Bristow, with the lower discount for the tier 1 cases (those with the most data) and higher discount for the tier 3 cases (those with the lower level of data).



Much is made of Collyer Bristow but they are not "independent" valuers (see RNS No 8587S of 14 July 2020 para 8 in response to Share Prophets comments they are a firm of solicitors working on the cases and have a vested interest.

We just have to wait and see how things pan out, but borrowing money to pay Corporation Tax upfront does show supreme confidence by the Board.

[maddox] 29/6/2022 09:11

Hi Sallad,

The various cartel cases are being progressed in an organised manner. The judge has decided to deal with a few cases that'll set benchmarks that the others will follow in arriving at settlement figures without all needing to go through the courts. This has the big advantage that MANO can ride on the coat tails of these cases and not need to fund 22 expensive legal cases. Also, the court established benchmark metrics will most likely be higher values than would be attained by out-of-court negotiation.

MANO has reappraised the value of its 22 cartel cases and thus put £5.3m of unrealised value into the P&L, on which yes tax is payable. This apportion of as yet in-flight yet to conclude cases is an obligatory audit requirement under fair-value accounting rules.

The other side of the accounting entry goes into the B/S as an asset. The 'carrying value' - of the cartel cases in the B/S has risen to £12.2m. I expect that MANO has been typically conservative in arriving at the likely settlement, but we won't know until the current cases conclude.

Some investors and also Analysts have a dislike for fair-value accounting - OTOH I can see positives. At least we're getting an indicative 'fair-value' view of the value of these cases and we're also getting in-sight into a managements' (and advisors') judgement on the value of their assets.

As investors we're always in possession of partial information on which to make an investment decision - but on-balance I'll always prefer more info than less.

[sallad3] 28/6/2022 19:47

Worth reading the recent judgment in the CAT ( which seems to indicate MANO's claims are some way down the pecking order.

The assignee Liquidators of some of the claims to MANO have also previously reported to Companies House in their annual progress reports that they don't anticipate getting anything.

Para 5 of Judgment:
“A significant number of claims have been brought in the UK seeking damages from one or more OEMs. Seven of those actions, brought by major purchasers, have been case managed together and have now been set down for a series of trials. The first, a joint trial of claims by Royal Mail Group and by BT Group against DAF, is currently being heard. The second, a joint trial of claims by two major truck rental groups, Ryder and Dawsongroup, against four of the OEMs is due to commence on 13 March 2023. And the third, a joint trial of test claimants drawn from three actions by companies in, inter alia, the Suez, Veolia and Wolseley groups, is due to start on 9 April 2024. The various other proceedings are much less far advanced.”

Questions for the AGM.

[sallad3] 28/6/2022 19:32

Unless I have misread things, MANO made a loss for the year

Pre-tax Profit for year: 4508

Note 13: Increase in fair value of cartel cases 5,106
nb: Tax is paid on this non-monetary adjustment

[martindjzz] 28/6/2022 15:10

I wrote to Mano asking about Cost of Sales per my last post on here. An impressively quick response came back saying that they are not paying more upfront for our cases and that external legal costs of their cases are not diverging in any material way from past experience. Good.

[asagi] 27/6/2022 14:00

Peel Hunt MANO's house broker have, rather curiously IMHO, decided to downgrade them from buy to hold. Why they would do this now rather than earlier

didn't they cut their FY 2023 forecast with results? Quite a simply argument to make that if they are going to make less, than the shares are worth a bit less too.

Asagi (no position)

[maddox] 27/6/2022 13:07

The Chronic Investor mag has reported that Peel Hunt MANO's house broker have, rather curiously IMHO, decided to downgrade them from buy to hold. Why they would do this now rather than earlier when MANO effectively gave a profit warning as the Govt company protection measures kicked-in I can't fathom.

It seems a very cautious stance in view of the key metrics improving, we've also got positive movement on the cartel cases.

[theborn] 27/6/2022 11:10

hxxps://ukinvestormagazine.co.uk/manolete-partners-set-for-insolvency-boost/

[theborn] 27/6/2022 08:53

Agree with the comments on here. I actually asked the question regarding the specific opportunity on working with HMRC on the fraudulent loans. On the assumption that the standard business will quickly get back to at least pre-pandemic levels given the current rates of liquidiations compared to pre-covid, there is the currently unpriced element of upside re the many thousands of fraudulent loans which govt and HMRC are hunting down. This could be an extremely valuable business as a stand alone, so to factor it into Mano's business model and the opportunites for economies of scale within the current structure I feel this could add a significant multiple booster if and when we here more. But from CEO's reply - they are actively progressing this strategy internally. Let's see.