⚠️ This update is historical and may no longer reflect the current situation. See the current updates here: current updates
This update explains the current status of the Nera litigation-funding portfolio on Mintos, including the reason for payment delays, the ongoing regulatory review, and the actions Mintos is taking.
Factual situation
1. Parties involved in Nera Notes
Mintos investors have financed a portfolio of UK consumer-claim litigation through Nera Notes (link to prospectus)
As in any Notes structure, there are multiple parties:
- The Notes Issuer, ie Mintos Finance No. 16
- The Lending Company, ie. Nera Capital Funding 2 DAC
- Loans to the borrowers, ie. loans to UK-based legal firms
Additionally, for current Notes, there is a servicer of the Loans, which in this case is Nera Capital Ltd (previously Claim Finance & Administration Co Limited). Nera Capital Ltd acts only in an administrative and servicing capacity and is responsible for loan origination to the borrowers, and subsequent servicing, collections, and coordinating enforcement. Once the loans were issued and they were to be financed through Nera Notes on Mintos, the particular loans to the legal firms were transferred to the balance sheet of the Lending Company set up for this purpose, Nera Capital Funding 2 DAC. This company holds only loans funded through the Mintos Notes structure. Nera Capital Ltd has to date received no remuneration for this service and will only receive payment at the conclusion of the loan notes, when Mintos investors have been paid in full.
The UK-based legal firms, who have received the loan, are to repay the loan when it is due or if the underlying litigation claim is resolved, whichever comes first. Once the loan is repaid, Nera Capital Ltd. collects it per its duties and transfers the cash flows to Nera Capital Funding 2 DAC, which then pays it to Mintos Notes Issuer and is distributed to investors.
2. Interest payments since April on Notes are delayed and shown as pending payments
Since April, interest payments on the Notes have been delayed because the underlying UK law firm borrowers have temporarily ceased making scheduled payments while they undergo an ongoing industry-wide regulatory review by the Solicitors Regulation Authority (SRA).
- The UK law firms have stopped making interest payments to Nera Capital Ltd. Such a decision by law firms has been taken because of the ongoing SRA review (see below)
As a result, Nera Capital Ltd is not currently receiving cash flows that would normally be passed on to Nera Capital Funding 2 DAC in their role as servicer
This means the Nera Capital Funding 2 DAC does not currently have funds available to distribute interest payments to Mintos Issuer and subsequently to investors.
According to the information available, the UK Solicitors Regulation Authority (SRA) is reviewing approximately 80 law firms, including the law firms that have received loans through Nera Notes on Mintos. We have been informed that the focus for these law firms funded through Nera Notes is on the solvency requirements of the law firms. The law firms have incurred expenses from filing claims on behalf of their clients and interest expenses on borrowings, but as the cases have not been resolved yet, income cannot be recognised. During the ongoing SRA review, the firms have taken a step in April to stop the payments to not further worsen their solvency.
Currently, there is no confirmed timeline for the resolution of the regulatory review nor an estimated date for the resumption of payments.
Please note that Mintos has not been able to independently verify the scope or status of the review, as SRA investigations are confidential and not publicly disclosed. Information has been provided via the relevant law firms.
3. Planned principal repayments
Though principal repayments are not due yet, they will very likely also be delayed because:
- The repayment of principal depends on the completion and settlement of consumer claim cases funded by the law firms
- Underlying legal claims are taking longer to resolve
- As case resolution is slower than initially expected, cash inflows that would normally repay principal will very likely be postponed.
On its own, this is not uncommon in litigation financing that resolving cases can take a longer time. Given the delay with case resolution, it was planned to make early repayments and place these Notes for new investments at a new maturity of 6-18 months. However, because of the ongoing SRA review and the stopping of interest payments, such activities are currently halted. The Notes, while not in delayed status, remain transferable on the Secondary Market.
Frequently asked investor questions
1. Is SRA review a temporary administrative issue or a more serious concern?
Any review by an authority shall be taken seriously. We have been informed that the review is part of an industry-wide solvency review of legal firms, not any other wrongdoing. Nevertheless, it is up to the SRA to make its conclusion and potential resolution of the review.
2. Is the SRA investigation limited to UK loans?
Yes. Based on current information, the regulatory review is limited to UK-related lending and litigation funding activities.
3. When will interest payments resume?
There is currently no defined timeline for payment resumption. Resumption of interest is expected only once the regulatory review is resolved and operational conditions allow for normal servicing to continue. This timing is uncertain.
4. Will principal be repaid on time when Notes mature?
Based on information provided by Nera Capital and the nature of litigation funding assets, there is a material likelihood that case resolutions will extend beyond original Nera Note maturities. This is a known structural characteristic of litigation finance, where recovery timing is dependent on court processes, settlements, and enforcement actions.
As a result, principal repayment at maturity cannot be guaranteed in the current circumstances and most likely will be delayed.
5. Can Nera Notes on Mintos be sold on the Secondary Market?
Yes. Investors can list and trade eligible Notes on the Secondary Market, subject to standard platform liquidity and demand conditions.
Final note
We understand that uncertainty and limited visibility can be frustrating, especially in an asset class where timing is inherently linked to legal and regulatory processes.
We will continue to monitor the situation closely and provide updates as soon as new, verified information becomes available.
For transparency and consistency, we will avoid speculation and focus on confirmed developments as they arise.