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Categories:Litigation / Dispute Resolution

Explosive allegations surface in Halliwells court case

18 April 2012 | By James Swift

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Halliwells’ equity partners altered the minutes of a meeting about the £25m Spinningfields reverse premium before passing them on to the rest of the firm, it was alleged in court today (18 April).

The allegation surfaced in a case being heard by Mr Justice Warren in the Chancery Division of the High Court concerning former junior equity partner Michael Burns, who retired from Halliwells in 2009 and joined DLA Piper later that year.

Lawyers for Burns were arguing that the terms of his retirement deed - which stipulated a ‘clean break’ for Burns from Halliwells - provided a complete defence to the failed firm’s liquidators’ demands for cash from the former partners.

However, Lexa Hilliard QC of 11 Stone Buildings, who has been instructed by Addleshaw Goddard on behalf of Halliwells LLP’s liquidators, BDO partners Shay Bannon and Dermot Power, argued that the events surrounding Halliwells’ collapse fell within the retirement deed’s exemption clauses, meaning that Burns was still on the hook.

Arguing the case, Hilliard at one point referred to allegations that Halliwells’ former equity partners had altered the minutes of a meeting about the division of the £24.5m reverse premium deal it had struck with its landlord before passing them on to the rest of the firm’s members.

A source told The Lawyer that, although this was likely the first time such allegations had been made in public, talk of altered minutes had been doing the rounds for some time among those close to the case.

The claims related to the £24.5m reverse premium deal that Halliwells struck with its landlord in 2005, of which £20.4m was shared out among equity partners in 2007 (20 June 2011), with the rest put back into the LLP.

The news comes as Halliwells’ former partners are set to enter mediation with BDO (12 April 2012).

James Potts of Erskine Chambers, instructed by Irwin Mitchell partner John Lord, was acting for Burns.

Burns could not be reached for comment.

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Readers' comments (22)

  • Breaking News | 24-Apr-2012 3:21 pm

    A little bird tells me BDO have lost...
    Not a great few days for Dermot or AG, but their strategy has been unfortunate in many respects,
    The narrow basis of this claim was defeated by the terms of the retirement deed, despite desperate attempts to make allegations in court at the last minute -I hear that other serious allegations were made in court which have not yet been reported - when these should have been made previously in the proceedings (to answer the earlier posters, one would assume that AG have now notified the SRA if their counsel is referring to these matters in open court and that the SRA will now be forced to take some action).
    A bigger issue is that rather than pursuing the potential raft of claims that were available to BDO against various of the EPs with the co-operation of many ex-FSPs, they have chosen to only pursue the EPs on Spinningfields (and to threaten to reclaim EP drawings) and to alienate the ex-FSPs by threatening to try to reclaim FSP drawings, when their input could have been very useful to the case against those actually responsible for the appalling Halliwells fiasco.
    BDO having made these explosive allegations is helpful to the ex-FSPs in terms of knowing that there is potentially material wthin BDO and AG's control which could be used to mount a defence or counterclaim to any drawings claim against them and indeed to bring claims against the EPs.
    Not a good result for Dermot or the creditors (just the hearing will have been very espensive)... the big winners would appear to be Mr Burns and any other EPs (and indeed FSPs) who have robust retirement deeds, and to a lesser extent the FSPs generally.
    I expect this sorry saga still has some twists and turns in it...

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  • Rob | 25-Apr-2012 5:25 am

    Did he not also (yawn yawn) give his life to that firm?

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