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Halliwells' administrators seek funds to cover £200m of debts

15 February 2011 | By Luke McLeod-Roberts

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Failed firm Halliwells owes creditors a total of around £200m, a letter from its joint administrators has revealed.

BDO partners Dermot Power and Shay Bannon, who were appointed joint administrators of the firm last year, have contacted all known creditors stating that they have received unsecured claims totaling £191,521,921.

The sum is much greater than the £14.1m that was initially believed to be owed to unsecured creditors including HM Revenue & Customs and the landlord of the firm’s former headquarters at Spinningfields (20 September 2010).

The higher figure is believed to have been calculated by taking into account the remainder of the term of all leases, some of which have as much as 20 years left on them.

The document, seen by The Lawyer, claims that £176,499,347 is owed to landlords and £5,679,582 to lease creditors, while HMRC is owed £4.3m in tax and £1.2m in VAT, it is alleged.

In November RBS, which is owed £17.7m, was one of several creditors to form a committee to try to recover funds. Other creditors on the committee are: HMRC; a German fund run by Credit Suisse Asset Management, which is the landlord of the firm’s former headquarters at Spinningfields; ING Lease UK; and Halliwells’ Liverpool landlord, Bruntwood 2000 Beta Portfolio (22 November 2010).

The administrators’ letter also indicates that to date a total of £4.3m has been received from selling off parts of the business. Hill Dickinson paid £1.4m, Kennedys £197,000, BLG £1.25m and HBJ Gateley Wareing £1.5m. The administrators expect to receive a total of £7.4m from the law firm purchasers.

An additional £200,000 has been made from selling company cars and the administrators are also hoping to recover funds from the sale of Wembley corporate hospitality tickets.

While many jobs were saved through the sale of the business, the letter discloses that 22 per cent of all employees lost their jobs. Out of 671 employees, 83 redundancies were made when the firm went into administration on 20 July 2010, and a further 66 jobs were lost after a transitional period expired in the autumn.

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Readers' comments (34)

  • Logan | 15-Feb-2011 1:00 pm

    Really? That much? the sums involved are just ludicrous. I don't know how the partners that brought down that firm can sleep at night.

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  • Retirement ahoy!! | 15-Feb-2011 1:22 pm

    £5.5m owed to the taxman.
    Good work as ever HMRC!!!!

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  • Al Murray | 15-Feb-2011 1:48 pm

    Surely the leases have all been forfeited and the landlords can now try to secure new and better covenants? Why would rent for unexpired terms be taken into account? If that is the case then clearly the landlords will be far better off than they otherwise would have been.

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  • Anonymous | 15-Feb-2011 1:50 pm

    Really? The landlords are claiming that they won't be able to rent the propoerties to anyone else for the duration of the Halliwells lease(s). Nice bit of headlining.

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  • Solvent Tick | 15-Feb-2011 1:53 pm

    Sleep at night? They probably can't. Taking money out of the business when debts were in the nine figures? Trading while insolvent? Personal liability?

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  • Anonymous | 15-Feb-2011 2:49 pm

    I don't understand why the administrator is not disclaiming the lease.
    Would that not be the obvious way to reduce liabilities?

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  • Anonymous | 15-Feb-2011 3:02 pm

    I hope the creditors pursue the former partners of this awful firm to end of the earth. It'is absolutely disgraceful that HMRC are owed such significant sums of money in these dire economic times. This money could be spent on a new hospital, cancer treatment and schools. Utterly despicable, that we should all suffer as a result of this diabolical state of affairs.

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  • rachelswipe | 15-Feb-2011 3:59 pm

    anonymous - because administrators can't disclaim a lease. only a liquidator can do that. when it goes into liquidation, then the liquidator will most likely disclaim the leases. at that point, the landlords can put in claims for rent to the end of the term, but there is a statutory discount for receiving it early.
    or not at all, by the look of it.

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  • Anonymous | 15-Feb-2011 4:09 pm

    Blimey, this is nearly three times the firm’s last reported annual turnover. This must have been the most badly managed law firm in history! Time for partners to accept professional business managers to do the managing (not just paying lip-service to them), while they do the fee-earning.

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  • Anonymous | 15-Feb-2011 4:10 pm

    Anonymous at 2:49 pm - administrators don't have the power is disclaim leases - only liquidators have that power.
    The landlords will not be in any rush to forfeit the leases unless and until they find a new tenant; if they took the leases back now the landlords would have to pick up the tab for the empty rates.
    I suspect that when new tenants are found the landlord will then accept a surrender of the lease from the administrator (which he does have power to do).

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