Former equity partners consider rebuffing administrators; those at Gateley to opt for mediation
A former Halliwells partner who shared a £20.4m windfall payment with 31 of his counterparts is preparing to fight administrator BDO’s demands that the sum be repaid.
As revealed by The Lawyer.com last week (17 June 2011), the failed firm’s administrators, Dermot Power and Shay Bannon at BDO, have written to the 32 former equity partners who pocketed the proceeds of a reverse premium deal struck with Manchester office landlord Allied London in 2005 and paid in 2007. The letter asks the former partners to repay the premium, plus interest and costs, to help fund the £192m owed to Halliwells’ unsecured creditors.
Julian Lewis, who gave up his position as Halliwells corporate head in May 2008 to join Fladgate as a partner, has sent an email to some of the former partners inviting them to band together to rebuff the demand.
It is not yet known whether any of the partners have responded to the email or whether any counsel have been instructed. However, former Halliwells partner Rod Waldie, who shared in the reverse premium and who is now head of Gateley’s Manchester office, confirmed that the group is considering mediation with the administrators. “The letter invites mediation in relation to a transaction entered into more than six years ago and to decisions taken in the market at that time,” he said. “We’re dealing with the matter and considering the points raised before providing a composite response.”
Waldie joined Gateley when Halliwells collapsed along with 11 other equity partners who had benefited from the reverse premium. Former managing partner Ian Austin, former senior partner Alec Craig and former litigation partner Paul Thomas were still at Halliwells when it went into administration, but did not join Gateley. The other 20 being asked to repay their shares of the windfall had left the firm prior to its administration.
In 2005 Halliwells took on a 25-year lease on an office at 3 Hardman Square in Manchester’s commercial development Spinningfields. As an incentive for the firm to take the lease it was given part of the building’s freehold, which it then sold to Allied London in 2007.
Halliwells received £24.5m for the deal, £20.4m of which was distributed among the firm’s equity partners and the rest put back into the business.