These claims represent a substantial, though not exclusive, part of the law firms‘ current operations, cash flow projections, and expected settlement revenues.

The sector has experienced widespread and unforeseen delays in claim settlements due to ongoing legal proceedings and actions by the UK Financial Conduct Authority (FCA) concerning the framework for determining and paying compensation to affected consumers.

These delays have affected the firms‘ liquidity planning, including working capital requirements, overhead expenses, and cash retention decisions, despite their broader legal practices continuing to operate.

This development has impacted the entire motor finance claims market. The process of establishing a final framework is taking considerably longer than originally anticipated and could not reasonably have been foreseen within the original investment timelines.

For investors, it is important to note that these delays primarily affect timing. They do not mean that the underlying claims are no longer valid or that the compensation process has ceased. However, the expected duration of the portfolios financed through Bondster has extended beyond the original schedule.

Law Firm Activity

The two UK law firms that borrowed funds through Bondster portfolios and have been affected by the extended claims process are not passively waiting for the FCA process to conclude.

They remain among the more active participants in the market and continue to pursue claims and advance court proceedings wherever possible in the interests of their clients.

They are also continuing litigation, developing legal arguments, and seeking outcomes that may contribute to further progress for affected consumers and finance providers across the sector.

Recently, they achieved significant outcomes that have established important case law within this claims market. These decisions are expected to help clarify the legal position and support further claims.

Additional Regulatory Activity

The financial impact of the extended court timelines has been further amplified by a concurrent regulatory review conducted across the legal sector by the UK Solicitors Regulation Authority (SRA). This review includes operational oversight, financial stability, and client care requirements. As a result, the law firms have experienced increased actual and anticipated operating costs.

Restructuring

In light of these circumstances, Nera Capital, Bondster, and other relevant counterparties are working on a consensual restructuring or refinancing of certain lending arrangements.

The objective is to provide the firms with sufficient time and stability to continue operating their broader legal practices, meet overhead obligations, and pursue litigation and compensation processes.

The restructuring is also intended to support the repayment of principal and interest due to investors and other relevant parties. However, it remains subject to final agreement and any required regulatory or other approvals.

Potential Refinancing

At the same time, Nera Capital is actively exploring potential refinancing of the portfolio financed through Bondster.

It is currently engaged in discussions with four potential institutional investors, with negotiations reaching the term sheet stage in two cases.

One possible outcome would be the refinancing of the entire Bondster-funded portfolio, with the proceeds being used to satisfy amounts owed to investors.

The discussions remain subject to due diligence, final terms, documentation, and approval by the relevant parties. Refinancing cannot be considered certain until these steps have been completed.

Nera Capital’s Financial Position

Nera Capital acts as asset manager for the portfolios. It does not control the schedules of UK courts, regulatory processes, or the broader motor finance compensation framework.

Its role is to manage and oversee the underlying assets during this extended period and to cooperate with relevant parties in order to protect their value.

Under the relevant asset management arrangements, Nera Capital ranks last in the payment waterfall and is not entitled to receive payment before investor capital has been repaid.

Nera Capital continues to fulfil its responsibilities as asset manager. Its broader business continues to operate and grow internationally, supported by institutional investors and new funding commitments across its portfolios.

Next Steps

Nera Capital’s immediate priorities regarding the Bondster portfolios are to:

1. Continue the proposed restructuring process with Bondster and the affected law firms;
2. Support the law firms in their operations and litigation activities before the courts;
3. Monitor cash flow requirements, overhead obligations, and anticipated settlement revenues;
4. Preserve the value of the underlying claims throughout the compensation process;
5. Continue discussions with potential institutional refinancing partners;
6. Seek repayment of investor principal and interest as efficiently as possible under the circumstances.

Further updates will be provided to Bondster’s communications team once there is sufficient certainty regarding any material developments.