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 11:25 am
financial penalties aren't enough for these wide boys
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Anon | 20-Jun-2011 12:04 pm
now call me a cynic (hears chorus) but couldn't this just be a ploy by the administrators to ramp up their fees?
Now corp law isn't my thing but I can imagine this being a bit harder to deal with than a rear end shunt.
Asking for £20m is easier than receiving it.
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Anonymous | 20-Jun-2011 12:27 pm
re Anon at 12h04
You are a cynic.
BDO have a very reputation, stop smearing them with filth. Focus your cynicism on the Ex Halliwells Partners - they deserve it.
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Anonymous | 20-Jun-2011 1:17 pm
Oh to be in Gateley's board room......
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Interested Observer | 20-Jun-2011 3:02 pm
Wasn't there an earlier report in The Lawyer that four ex partners in Halliwells guaranteed the rent on their offices, and were being sued for it. As I recall, an application for summary judgement was starting on 20th June.............................
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anon | 20-Jun-2011 3:08 pm
The problem the ex-Halliwells partners have in defending the transaction is the failure to ensure that the partners receiving the funds were locked in to the business. I don't see how they can successfully defend this transaction as a result of this.
There have been rumours about the then FD receiving a payment from the reverse premium. It would be interesting to learn whether this was the case and if so whether the administrator will be pursuing him.
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Rural bliss | 20-Jun-2011 3:50 pm
“The letter invites mediation in relation to a transaction entered into more than six years ago ..."
"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."
How is 2007 more than six years ago? Is Mr Waldie speaking from the future?
I think we should be told.
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Anonymous | 20-Jun-2011 5:50 pm
Ref rural bliss above; they bought the building off plan and agreed the deal a couple of years prior to completion, the payment being made once the lease completed following completion of the building.
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Anonymous | 20-Jun-2011 5:50 pm
All in all a very harsh reaction I think. The freehold was an asset to the partnership as an incentive as part of the move. An asset that they were entitled to sell (again, as part of the LLP). Mediate it to the hills boys – you were given a very lucrative asset, and one which was exercised at the top of the market, Fair game! As for giving it back...... thats business BDO, would you?
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Anonymous | 20-Jun-2011 6:25 pm
public flogging in spinningfields - any votes?
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