Shares in heavily indebted law firm Slater & Gordon Limited (ASX: SGH) are up more than 20% this week to 33.5 cents on relatively heavy trading volumes for a variety of reasons including a favourable court ruling for personal injury law and small claims specialists in the UK.

Yesterday the stock closed up around 14% on volumes around triple recent levels, while today’s trading volume is even larger as speculation mounts over the future of the company.

One positive reported on April 25 by leading UK law journal The Law Society Gazette is a Court of Appeal ruling that favours small claims specialists over insurers in keeping claims within the UK legal system’s small claims case management portal. The Court of Appeal’s Justice Jackson reportedly indicating in his verdict that around 800,000 cases a year were within the remit of the administrative rules he was being asked to interpret.

The appeal was brought by a small firm of personal injury solicitors in the north of England, although its success will be somewhat nugatory to the future of Slater & Gordon’s small claims and tort law businesses if it’s unable to negotiate a restructured debt agreement with its creditors at National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

The deadline for an agreement for revisions to its syndicated finance agreement is April 30 and if no agreement is reached or Slater and Gordon cannot reverse its cash outflows then the creditors have the right to draw the debts in from March 31 2017.

The banks are unlikely to agree to extend anymore credit to Slater & Gordon and any new agreement is likely to prove dilutory to existing shareholders as the banks take some form of equity in the firm under a debt restructure. However, if the law firm can reach an agreement with its creditors and execute a turnaround that would revolve around divesting its loss-making UK businesses it may have a future yet.

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Motley Fool contributor Tom Richardson owns shares of Slater & Gordon Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.