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)
Posh | 21-Jun-2011 7:26 pm
What else do you expect from a law firm named after one of the Spice Girls?
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Manc street preacher | 21-Jun-2011 9:57 pm
Surely these reports need balancing? It must be time to ask affable Ian Austin for another interview. He was the one who negotiated the deal with the Landlord.
Alternatively why not ask blunt speaking Alec Craig? He was the one wandering around the firm saying "this firm won't go bust, we have a good business".
Blunt Alec is rarely seen whilst affable Ian seems to have quelled his enthusiasm for talking to the press.
I wonder why?
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Anonymous | 22-Jun-2011 9:12 am
@ anon 20-06-2011 5.50pm
As far as my understanding is they never owned the freehold. They received a "reverse premium" from their landlords to take out a lease. The only time a landlord would consider handing out one of these when times are good is if the tenant has signed up to some particularly onerous terms...
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Anonymous | 22-Jun-2011 12:41 pm
Do you people not get sick and tired of talking about the same old rubbish??? For god sake give it a rest and think about the impact that this will have on those who have managed to keep their job with one of the companies! BORRRRRRRRRRRRRRRRRRRING.
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Anon | 22-Jun-2011 3:22 pm
Anyone want to guess the identity of Anonymous at 12.41 pm?
Perhaps a former Halliwells employee who continues to be very close friend of one of the owners of the Tuscan palazzo, the Cumbrian lakeside retreat, the Spanish pool or the Aberdonian castle referred to yesterday?
Anyway, sorry if you're bored but the biggest law firm collapse of recent years is of interest to some of us.
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Anonymous | 22-Jun-2011 4:04 pm
Is there any news of the £4M summary judgement application, for the personal guarantees given by Alec Craig and three others for unpaid rent on St James's Court, which is being heard this week?
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Interested Observer | 22-Jun-2011 5:28 pm
Has anyone else noticed how rubbish the reputational management is by lawyers?
Whenever a firm is brought to the ground, or a partner caught nicking money, two crass techniques are used.
1. Endless posts about what a gentleman Mr. Tealeaf is how it must all be a dreadful mistake.
2. Bullying drivel of the "have you not got better things to do" kind.
Can't someone come up with something a bit more sophisticated?
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Anonymous | 22-Jun-2011 5:30 pm
Anonymous at 12:41pm sounds suspiciously like someone mid-divesting himself of assets in Switzerland and Angelsey....
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Interested Observer | 23-Jun-2011 11:44 am
Does the SRA show any interest in all this shenanigans? If a clapped out two man operation in Barnsley High Street, had run the firm as Halliwells did, they'd be up before the SDT by now. How come the big lads get away with it all?
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Robert Shaw | 23-Jun-2011 4:46 pm
I have read a few of these posts and as an outsider what shocks me is the level of animosity from people I don't know directed against people that presumably they didn't know....and all of it posted anonymously. Maybe not all of the posts are by lawyers but it certainly doesn't say much of the 'professionalism' of the profession. And I am not, before the posts start, connected to any of this business. I am unimpressed by what I read about the conduct of some of the former Halliwells partners and I do believe the failure of a major law firm is of general interest (as are the reasons for it ) but a lot of this is unsavoury and has little to do with improving the profession.
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