BDO demands return of cash from ex-Halliwells partners
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.
For more details and comments, see:
Halliwells client money fiasco haunts new owners
Axed Halliwells lawyer’s Gateley action founders
Halliwells, the aftermath: HBJ and failed firm face court
Halliwells’ administrators seek funds to cover £200m of debts
Halliwells’ ex-managing partner: I gave my life to that practice
Dozens of small businesses suffer after Halliwells’ collapse
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Readers' comments (66)
Anonymous | 20-Jun-2011 8:34 am
Surely the mediation is with their ex-wives who now have the cash......!
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Anonymous | 20-Jun-2011 8:47 am
Are they shameless?
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Anon | 20-Jun-2011 9:21 am
This transaction was unlawful for so many reasons. First, it was a breach of the LLP deed. The deed imposed an obligation on all members to act towards every other member in accordance with utmost good faith. Trousering £20 million without telling the FSM's was a clear breach (just ask yourself if this would have been a fact which a reasonably prudent FSM would have wanted to know). If taking the money out really was in good faith in the best interests of the business, why did every single one of those involved keep it a secret for so long?
Second, it was a breach of the general duty to act in good faith in the best interests of the LLP. Is the LLP in a better or worse position after you take £20 million out without telling the other partners? Is this really going to promote the long term interests of the business?
Let's hope that the Insolvency Service considers disqualification proceedings against those involved, or the SRA begins disciplinary proceedings. They need to ask themselves whether Is a single one of the individuals who took the money a fit and proper person to be a solicitor.
Anyway, they're only being asked to pay back what they took out. Unlike all the people who were paid a fraction of what they "earned" who lost their jobs when the business went bust, and unlike the creditors who didn't get paid for what they supplied.
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Anon | 20-Jun-2011 9:30 am
32 tasteless houses in Cheshire for sale. Going cheap. Free Bentley with each one.
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Multiple miggs | 20-Jun-2011 9:37 am
I bet they papped their pantaloons when they got the letter
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Po | 20-Jun-2011 10:12 am
And they advise business people?
Total lack of credibility
Did nobody think about their duties to the llp?
I suppose naked greed won the day
Austin got a 50k bonus for doing such a good deal.
That just about sums these spivs up
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Its all in the details | 20-Jun-2011 10:14 am
Whilst this article picks out 15 partners who were still with Halliwells at the end, most of whom appear to have gone to Gateleys, by my reading there were another 17 partners who received the kick back and then immediately jumped ship?
Atleast the 15 were still bringing work in to the business that gave them the ludicrous pay out. Those 17 raped Halliwells for what they could get and then legged it. Name and shame them please The Lawyer, I for one would like to know who they were and what firms they are at now!
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Anonymous | 20-Jun-2011 11:11 am
totally shameless
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Anonymous | 20-Jun-2011 11:18 am
there is no way this can end good, lets hope it ends fast.
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Anonymous | 20-Jun-2011 11:22 am
Limitation Act defences?
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