Questions surround £666k director’s loan
A legal influencer’s failed law firm is being probed by liquidators searching for a way to pay back the large debts that remain outstanding.
Alice Stephenson’s firm Stephenson Law entered into liquidation back in November 2023, with debts at the time totalling in excess of £1.5 million, over half of which was owed to HMRC in unpaid tax.
When the firm entered liquidation Stephenson was offering a paid-for course on how to set up your own successful law firm, and had just released a book ‘(Out)Law: From Teenage Mum to Legal Trailblazer’. She now runs another law firm unregulated by the Solicitor’s Regulation Authority, Plume.
Back in 2023 Stephenson told her large LinkedIn following, now over 68,000 strong, that “We owed a large amount to HMRC which we were paying back every month, but HMRC chose to call the whole debt in, which forced us into liquidation. There were no staff, clients or client money in the business.”
What there was, however, was a directors loan made out to A Stephenson of £666,157.72, the value of which at the time was marked in a liquidation document as “uncertain”.
One year on and an update published by liquidators Forvis Mazars has shed some light on the situation. Spoiler alert, it’s not good news for HMRC, the 55 unsecured creditors, the secured creditors, or even the liquidators themselves.
Of the £201,084 claimed by secured creditors nothing has been paid so far, with the expected payments marked as “uncertain”. It is the same story for the £487,289 claimed by unsecured creditors.
HMRC’s claim of £819,587 appears to be partially set off by a Corporation Tax Refund of £124,340, leaving just under £700k outstanding.
As for the directors loan, marked as having a book value of £666,158, the realised value remains “uncertain”. The author of the document, Mark Boughey, records that “Following my appointment I sought repayment of the DLA [Director’s Loan Account]. Payment was not forthcoming and a meeting was held with Mrs Stephenson.”
He adds: “My subsequent investigations established that the book value of the DLA did not take into account dividends which has been declared and offset against the DLA, which I do not accept were lawful dividends.”
So far Stephenson has been repaying the loan in the sum of £1,000 per month, totalling £8,000 at the date of the report. At this rate, it would take Stephenson 54 years to make full repayment.
Boughey proceeds to note that Clarke Willmott have been instructed to aid “ongoing” investigations, information from which may assist with “any potential future action”.
The report goes on to offer the debt for sale, stating that “Should any creditor or third party have an interest in purchasing the DLA debt, please submit any offer to the liquidators for consideration, with proof of funding in support.”
Stephenson Law also made a loan of £54,049 to another of Stephenson’s companies, FlamingoCoSec Limited. Flamingo, the report states, “has no assets and is therefore unable to make any repayments”, having been struck off the register and dissolved in September 2024.
On top of this there are further investigations which remain ongoing relating to “material transactions conducted in the pre-liquidation period, other than in the ordinary course of business”. These investigations have continued “in order to establish whether there are any potential assets to recover or conduct which requires further investigation.” Clarke Willmott have also been brought in to assist here.
Turning to the estimated outcome for creditors, the document begins by noting that there are “insufficient funds” to cover the liquidation expenses, and that “there is currently no prospect of a return to any class of creditor”.
It is also recorded that Forvis Mazars’ pre-liquidation fee of £9,000 plus disbursements and VAT “remains outstanding”. This is in addition to the £61,487 of liquidation costs and £36,714 in legal advice, so far. Add on some miscellaneous administration costs (printing, postage, software, etc), and the cost of the liquidation is already £108,951.
For this work the total repayments made total only £9,101, partly from the directors loan repayments, bank interest, and a pension overpayment.
The estimated value of the firm’s goodwill is marked in the liquidator’s statement as “Nil”.
Stephenson has been approached for comment.