Former Halliwells fixed-share partners query BDO's impartiality
A group of former Halliwells fixed-share partners have questioned the impartiality of the failed firm’s administrators, claiming they previously benefited “from the most lucrative referral opportunities which Halliwells had”.
The news comes as the group of former fixed-share partners continue to mull action against the former equity partners (17 October 2011).
According to documents filed at the High Court, the former fixed-share partners suspect that Halliwells’ administrators – BDO partners Shay Bannon and Dermot Power – failed to declare an “extremely close relationship between Mr Power and the Manchester corporate recovery practice of Halliwells”.
The former fixed-share partners also question why no mention was made of the £24.5m reverse premium in the administrators’ first creditors’ report in September 2010, particularly when the deal had already been commented on by Power in the regional press earlier that year.
Ultimately, the former fixed-share partners believe that certain former Halliwells equity partners have been given favourable treatment at the expense of the creditors and themselves, and are seeking access to court documents to ascertain whether their suspicions are well founded before bringing the conduct of Halliwells’ former board and the administrators before the court.
One example of the allegedly cosy relationship between BDO and Halliwells partners put forward by the fixed-share group was the administration of Allsports. Here, former corporate recovery head Andrew Buchanan, who was one of the members to profit from the Spinningfields reverse premium windfall (17 June 2011), referred the administration, which incurred time costs of £2.7m, to BDO’s Power.
However, Power has refuted any suggestions of impropriety.
Responding to the allegations, Power said: “I’m aware of this observation, which was made in relation to the joint administrators. The joint administrators had “no prior professional relationship” specifically and only “with the equity partners of Halliwells LLP”. In common with any two eminent professional firms there were numerous times when both firms acted on the same side or against each other when representing clients, across a wide range of disciplines.
“The secured creditors assenting to the court appointment were aware of how professional firms interact with each other. The way in which those firms work was also discussed with the creditors committee who have been supportive of all actions taken in this case.”
The group of 14 former Halliwells fixed-share members are being represented by Irwin Mitchell partner Chris Jones.
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Readers' comments (11)
The plot thickens... again! | 30-Apr-2012 3:32 pm
Oh dear!
Yet more revelations.... and we are a long way from done with this sorry saga...
Addleshaws' compliance team will be working on little else at present, one suspects!
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Not in this lifetime nor the next | 30-Apr-2012 8:46 pm
They don't interact any more, BDO are being shunned by those firms whose partners are being sued and they are even being shunned by those who are partners elsewhere but whose friends are being sued. Hard to see how BDO recover from this.
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Pointer dog | 30-Apr-2012 11:18 pm
Didn't Alec Craig win the Allsports job and give it to Dermot Power?
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Anonymous | 1-May-2012 8:26 am
Oh come on, Dermot Power has been a "name" in Manchester insolvency for at least the last 20 years. Eh that's why he got this job.
Too many conspiracy theorists.
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Anonymous | 1-May-2012 12:45 pm
@ anon at 8.26am
Interesting you raise the question as to why BDO got this job, I gather that they were instructed by Halliwells' management board in the run-up to the insolvency, which is what got them in pole position to get the administration appointment.
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Anon | 1-May-2012 3:19 pm
The question is whether BDO LLP and/or the two individual administrators had a prior professional relationship with Halliwells LLP. If they did, it needed to be disclosed on the Form 2.2B filed by the proposed administrators.
It's simple question, really. If Halliwells LLP had been instructed by BDO, or had referred work back and forth, this has to be disclosed.
A prior professional relationship doesn't in itself disqualify the IP from acting. The question is whether there is a conflict of interest in accordance with the Insolvency Practitioners' Joint Code of Ethics.
Para 10 of the Joint Code of Ethics talks about "Familiarity" threats to an IP's independence and gives as an example any individual within the IP's firm having a close personal or professional relationship with anyone who has an interest in the insolvent business.
BDO's response doesn't seem to address these issues (although in fairness to them, it depends what question they were asked).
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Anonymous | 2-May-2012 7:13 pm
Andrew Buchanan is a good man, a pleasure to work with and for, and leads by example. Find someone else to pick apart - god knows there are plenty to choose from. Leave Buchanan alone.
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Anonymous | 3-May-2012 2:10 pm
Seconded
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Bambi | 3-May-2012 3:04 pm
In my experience, Andrew always had lots of time to develop the talents of junior solicitors.
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Buchanan for Mayor of Spinningfields | 3-May-2012 11:08 pm
Follow my lead......take a share of a £21m reverse premium, encourage the business to borrow about the same and stick around to help the business into administration. Not really the best example to set is it?
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