Why Impact Holdings soared 188%

Funding provider Impact Holdings has won its appeal against AIG Europe Insurance, which will see the latter cough up £1 million in damages. The decision saw Impact Holdings triple in value to 139.8p, drawing the week to a nice close for its long-suffering shareholders.

Impact provides short-term funding solutions to the legal and bridging and development markets, and its subsidiary, Impact Funding Solutions Limited (IFSL), has been trying to reclaim loans paid to solicitors and insurers for disbursement funding. But one firm it had been chasing, AIG Europe Insurance, refused to pay up. Initially, the judge found in favour of AIG, concluding that the sums sought by IFSL were excluded under the PI Policy.

However, Impact successfully appealed the ruling, with the judge deciding that the loss suffered by IFSL came from AIG's negligence - exactly the type of loss the solicitors' compulsory insurance is designed to cover. AIG tried to get permission to take the case to the Supreme Court, but the Court of Appeal refused. However, the insurer could still go straight to the Supreme Court to try and overturn the ruling.

Chief executive Paul Davies said: "Even if AIG receives permission to appeal, I am confident that the board has the resolve and is fully committed to continuing the efforts for recovering loans from those errant law firms that misused the disbursements funding provided by IFSL. The solicitors that advised IFSL on the disbursements funding arrangements before loans were made are also being pursued and will continue to be pursued until IFSL obtains redress."

AIG is now required to fork out £986,515 for damages and interest, and a further £175,000 to cover IFSL's costs. This is more than the £906,376 revenue generated by Impact Holdings in the six months to 30 September 2014.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.