Unsecured creditors of Midlands law firm Challinors, which collapsed with debts of more than £11 million, are unlikely to receive anything according to administrators.
The grim outlook was revealed in a report to members and creditors by administrators Baker Tilly.
Unsecured creditors are owned a total of £7.1 million, while Allied Irish Bank - which is owed £4.5 million - is the only secured creditor.
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Challinors went into administration in August with the loss of 46 jobs.
Attempts to sell the company as a whole failed, but 13 offers were made for parts of the business and various parts of it were taken on by rivals.
Eight members of the family law team moved to the Birmingham office of Cartwright King, while eight medical negligence specialists from the Birmingham and Black Country-based firm were employed by Shoosmiths.
National firm Clarke Willmott also acquired parts of Challinors’ private client and commercial litigation teams, along with 10 members of staff.
Liverpool-based personal injury lawyers SGI Legal took on Challinors’ caseload.
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In its report Baker Tilly, which assumed the administrator’s role following its takeover of RSM Tenon, said Challinors was “adversely affected” by the collapse of Birmingham law firm Cobbetts in February this year and a number of other “well-publicised failures which made the refinancing of the business extremely difficult”.
The report also said the firm’s troubles stood in the way of a potential rescue, where an unnamed legal consultancy that had been prepared to inject £2.5 million into the firm became “increasingly frustrated”.
It added that a bid to become an alternative business structure (ABS) failed due to paperwork not being completed on time.
Challinors, which had 12 partners, owes money to about 250 creditors.
Two ex-clients also launched legal action against Challinors’ partners, alleging they were owed a total of £650,000 in loans they made to the firm’s partnership.
The biggest unsecured creditors include HMRC (£1 million), South Tyneside Borough Council Pension Fund (£489,000), a food supplier thought to be owed £400,000 and Aberdeen Property Investors (£392,189).
The administrators said unsecured creditors are entitled to submit claims within the individual voluntary arrangements of the firm’s current partners. The shortfall to Allied Irish Bank will also form the bank’s claim in the IVAs.
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Other creditors include West Bromwich property investment services business Real Estate Investors, which is owed several hundred thousand pounds, and the firm owed more than £200,000 in rent to landlord Edmund Propco for its Birmingham city centre office at Edmund House on Newhall Street.
Property company Jer Excelsis is owed around £200,000 and a number of councils on the creditors’ list include Sandwell Council (£67,824), Birmingham City Council (£6,652), Nottingham City Council (£10,816), Dudley Council (£12,033) and Wolverhampton City Council. West Bromwich-based property company Bond Wolfe is also owed £71,855.
Challinors was set up as Challinor & Roberts in 1948, then merged with West Bromwich firm Lyon Clark in 1996 to form Challinors Lyon Clark.
It had offices in Birmingham, Halesowen, West Bromwich, Wolverhampton, Nottingham, Loughborough, Leicester and Long Eaton.