The same warranted loan note return as every product — a fixed 100% per annum on loaned capital, payable quarterly, decoupled from claim outcomes, at a 20:1 ratio. What is distinct to Reserve: a Tier 1 / Tier 2 deposit-taking bank commits the reserve capital to build the asset-backed securities and earns the Reserve Banking lending-book enhancement on top of the coupon. This is a summary to support due diligence; it is not an offer or a financial promotion.
The warranted loan note is a bilateral loan between the investor and a regulated law firm to finance the processing of consumer-credit claims. The loan carries a fixed, contracted rate not linked to the success, settlement or recovery of any claim. The return is identical across Reserve, Institutional and Capital.
The firm's covenant is the credit on the instrument; the firm is the sole obligor (see §6). EPC Ventures acts as business development consultant and capital-raising mandate for the law firms; it introduces the facility and does not receive the loaned funds. LITDAQ is the private exchange for litigation assets. AiGLe is the grading agency; AiGLe Scores are analytical opinions, not credit ratings.
The bank commits reserve capital to the regulated law firm — the sole obligor — and builds the asset-backed securities. Capital is applied at £100 a claim at the settlement phase; the firm pays the contractual coupon, decoupled from any single claim, and recycles the principal; and the reserve capital’s availability to support the residual court claims is precisely what justifies constructing the ABS.
The return is the same warranted loan note coupon as every product. What is distinct to Reserve is the capital reserve: a Basel III deposit-taking bank commits the reserve capital to build the asset-backed securities, and earns the Reserve Banking lending-book enhancement alongside the assured coupon, from a single capital commitment.
The coupon is contractual loan interest, payable by the law firm, independent of claim success or recovery. £1 of loan supports £20 of claim value. Figures shown per £1,000,000 and scaling linearly to institutional commitments.
| On a £1,000,000 loan | Value |
|---|---|
| Reserve capital committed (loaned) | £1,000,000 |
| Assured rate | 100% per annum |
| Interest paid each quarter | £250,000 |
| Interest paid per year | £1,000,000 |
| Concurrent claim slots funded (£100 each) | 10,000 |
| Claim value supported (20:1) | ≈ £20,000,000 |
| Principal returned at term | £1,000,000 |
Because the structure is a per-claim processing loan, the economics extend linearly: a larger commitment funds proportionally more claim slots, builds proportionally more ABS, and earns proportionally more lending-book enhancement, at the same 100% per annum coupon and the same 20:1 ratio. The loan note is illiquid; there is no established secondary market.
| Feature | Reserve | Institutional | Capital |
|---|---|---|---|
| Investor | Tier 1/2 Basel III banks | Funds, family offices, endowments | HNW / sophisticated |
| Return | 100% p.a. | 100% p.a. | 100% p.a. |
| Ratio | 20:1 | 20:1 | 20:1 |
| Commits reserve capital | Yes — builds the ABS | No | No |
| Reserve banking enhancement | Yes — top-down NIM | None | None |
| Court funding on the residual | Law firm | Law firm | Law firm |
All three share the same instrument, the same 100% per annum paid quarterly, and the same 20:1 ratio. They differ only in where the reserve capital sits: Reserve uses the bank's balance sheet to build the ABS (reserve banking advantages); Institutional and Capital require no separate reserve capital, because the law firm takes up the court-funding requirement.
The facility finances two consumer-credit claim genres whose liability turns on identifiable data points. The figures show one year on a £1,000,000 pool of 10,000 concurrent claim slots — the collateral base behind the asset-backed securities the bank builds and holds.
| Metric | Revolving Credit | PPI |
|---|---|---|
| Cycle length | 12 weeks | 52 weeks* |
| Cycles per year | 4.33 | 1.00 |
| Claims processed / yr | 43,333 | 10,000 |
| Law firm revenue per claim | £576 | £1,000 |
| Gross firm revenue / yr | £24.96m | £10.00m |
| Net firm revenue : cost of finance | ≈ 24× | ≈ 9× |
* PPI cycle modelled at 52 weeks as a conservative default; revenue per claim taken as 50% of a £2,000 average damages value. Editable assumptions, to be confirmed against actual PPI resolution data. Law firm revenue figures are illustrative.
The facility finances graded, financeable claims through the settlement process — up to court. The claims are built to win, so the overwhelming majority settle before they reach it: a realised 98% on the closed book to date. For the small residual that does not settle, the borrowing law firm assumes the court costs and repays the loan capital. The loan is made solely to the law firm, which is the sole obligor.
Because the return is decoupled from litigation outcomes, the diligence focus is whether each firm has the covenant and cash generation to meet a fixed obligation — a credit assessment of the firm, supported by the genre economics in §5.
Flags for diligence, not conclusions, to be confirmed by FCA-experienced counsel and the institution's regulatory-capital team before any capital is committed.
| Risk factor | What it means | Diligence focus |
|---|---|---|
| Borrower covenant | The assured return is only as strong as the law firm's ability to pay it; the firm is the sole obligor. | Primary risk — credit assessment of the firm |
| Coupon fundability | A 100% coupon must be serviced from the firm's claim revenue (≈ 24× / 9× cover in the model). | Evidence outcome-independent cash flow under stress |
| Concentration | Two named borrowers carry concentration risk. | Assess each firm's standing and any concentration cap |
| Reserve banking treatment | The lending-book enhancement depends on the reserve banking treatment of the ABS held on balance sheet. | Confirm against CRR II / CRD V and the bank's ICAAP / CRO view |
| Regulatory recharacterisation | Risk of recharacterisation as a CIS, a litigation-funding interest, or a regulated security with unmet permissions. | Review by FCA-experienced counsel |
| Liquidity | The loan note is illiquid; no established secondary market. | Hold to term; size accordingly |
The bilateral loan is intended to sit outside the FSMA s.235 collective-investment-scheme perimeter and outside litigation-funding characterisation, with distribution under FPO exemptions; this should be confirmed by counsel.
EPC is building an initial £50 million book of the Warranted Loan Note. The book is sized to the volume of claims now ready to process through Mediate-ai, and allocation is on a first-come, first-served basis. A second raise is planned for October / November 2026 to fund new no-defence genres as the data rail extends.