A prominent sports law firm failed to prevent a litigation funder’s winding-up petition in High Court.
- Deputy Judge Curl KC dismissed arguments from the Manchester-based IPS Law regarding the winding-up petition.
- The dispute centred on a £500,000 loan given by Safe Harbor Equity to support litigation efforts.
- Judge Curl found flaws in evidence and dismissed IPS’s claims of contractual breaches involving ‘Project Red Card’.
- The court concluded there was no substantial dispute over the debt, dismissing the restraining application.
In a significant legal development, a sports law firm, IPS Law, based in Manchester, has been unsuccessful in persuading the High Court to prevent a litigation funder from advertising a winding-up petition. The issue stemmed from a £500,000 loan provided as bridging finance by Safe Harbor Equity, a US company subsidiary, in July 2023. This loan was intended to fund litigation initiatives, and the inability to repay it has led to the current legal action.
Judge Curl KC, a deputy in the Insolvency & Companies Court, was critical of the evidence presented by IPS Law. He particularly noted the lack of clarity from IPS’s owner, Chris Farnell, regarding the expenditure of the loan intended solely for litigation purposes. The money forms the basis of the debt Safe Harbor is seeking to reclaim, which revolves around ‘Project Red Card’ – proposed claims against the improper collection and use of football players’ performance data by various companies.
IPS Law defended against Safe Harbor’s petition on two main grounds. First, they claimed assurances were made that the repayment agreement would not be enforced. Second, IPS claimed they possessed cross-claims worth £60 million, originating from projected damages they were allegedly entitled to as per contractual agreements. Furthermore, they argued that Safe Harbor induced Global Sports Data and Technology Ltd (GSDT) to breach its agreement with IPS and improperly disclosed confidential information, leading to IPS’s exclusion from ‘Project Red Card’.
Judge Curl, however, found these assertions lacking credibility. He described as “commercially absurd” the notion that any lender would assure non-enforcement of a repayment agreement, particularly without documented confirmation. The judge also underscored the inconsistency in Mr. Farnell’s testimony and noted the absence of substantial evidence supporting IPS’s claims of confidentiality breaches.
Moreover, Judge Curl highlighted that IPS did not have an irrevocable right to litigate or claim proceeds from ‘Project Red Card’. The judge found it obvious that as GSDT’s solicitor, IPS could not retain negotiation information confidentially from GSDT, their client. Subsequent communication between parties did not validate IPS’s claim to any damages or losses that could be set-off against the petitioned debt.
Concluding, the court determined there was no substantive dispute concerning the debt as claimed in the petition by Safe Harbor. Judge Curl accordingly dismissed IPS Law’s application to restrain the advertisement of the winding-up petition, reinforcing the funder’s position to proceed.
The High Court’s decision underscores the critical scrutiny applied to financial and contractual claims in litigation funding disputes.
