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 the end of March on Notes are delayed and shown as pending payments
Since March 26, 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 at end of March 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. Delayed payments and upcoming principal repayments
The first larger part of principal payments due on May 20, 2026 has not been made per schedule. Although the remaining principal repayments are not yet due, they are also likely to be delayed because repayment depends on the completion and settlement of consumer claim cases funded by the law firms.
The underlying legal claims are taking longer to resolve than initially expected. As a result, cash inflows that would normally be used to repay principal have been postponed. In litigation financing, extended case timelines are not uncommon.
The Notes that are not in pending payment status remain transferable on the Secondary Market.
What is Mintos doing in the current situation?
Repayment of the Notes ultimately depends on the resolution of the underlying litigation cases. Because the expected timelines for resolving litigation cases extended beyond the original Note maturities, Mintos and Nera Capital had discussed a potential restructuring approach. This would have involved gradual early repayments of the existing Notes and the issuance of new Notes with maturities of 6–18 months, aligning the investment term more closely with the expected case resolution period.
However, due to the ongoing SRA review and the suspension of interest payments, these plans are currently on hold.
At present, the primary objective is to preserve the ability of the law firms to continue managing and resolving the underlying litigation cases. Even if litigation outcomes are unsuccessful, the After-the-event (ATE) insurance is expected to cover the case costs and serve as a potential source of repayment.
At the same time, the ongoing SRA review — which reportedly focuses on the solvency of the law firms — may create uncertainty around the firms’ ability to continue their operations without disruption. Therefore, Mintos is currently in discussions with Nera Capital, the affected law firms, and other funders to identify solutions that would minimize the impact of the review on the underlying litigation cases. These discussions may also result in amendments to the existing loan terms and conditions. We expect the discussions to continue over the coming weeks.
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. Other litigation funders have said they are not affected by the SRA review. How can it be industry-wide?
The SRA review covers a defined set of UK law firms with high-volume consumer-claim caseloads, not the litigation finance sector as a whole. Other funders whose lending model or borrower base is different may not be affected. Our update reflects the situation specifically for the law firms funded through Nera Notes.
3. 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.
4. When will payments resume?
There is currently no defined timeline for payment resumption. Resumption of payments depends on the regulatory review being concluded and normal servicing being restored. This timing is uncertain.
5. Will principal not due yet 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.
6. Can Nera Notes on Mintos be sold on the Secondary Market?
Yes. Investors can list and trade eligible Notes, i.e. notes that are not in pending payments or overdue, on the Secondary Market, subject to standard platform liquidity and demand conditions.
7. Why is the overdue amount increasing?
Because scheduled repayments are currently not being received on time, amounts that would normally be repaid to investors remain outstanding and accumulate as overdue payments.
8. Do the missed payments mean the investments are lost?
No, currently, such a conclusion cannot be drawn. The delays to Note holders reflect delayed expected cash flows from the resolution of underlying claims and SRA review.
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 work on the situation closely and provide updates as soon as new, substantial information becomes available or at minimum every two weeks, even if there is nothing material to report. We will also post each update in the community thread.
For transparency and consistency, we will avoid speculation and focus on confirmed developments as they arise.