Ex-client hits Challinors senior partner with bankruptcy petition

A former client of financially struggling Midlands firm Challinors has slapped the practice’s senior partner with a bankruptcy petition. 

Solihull-based businessman Dharmendar Khag told The Lawyer he took the move after serving 16 of the firm’s past and present partners with statutory demands several weeks ago for the repayment in full of a £400,000 loan, made in two tranches over the last few years. 

Khag claims that only three of the 16 lawyers filed a defence to the demands, with one maintaining he was not a partner at the time the loans were made, another claiming to have been a consultant and not a partner, and the last saying he knew nothing about the loans. 

According to Khag, the firm’s senior partner, Paul Griffiths, did not file a defence and yesterday a service processor served him with the bankruptcy petition. A court hearing is understood to be scheduled for next month. 

Khag said he has informed the Solicitors Regulation Authority (SRA) of the petition as well as RSM Tenon, the administrators handling Challinors’ affairs and a potential sale of the firm. Khag said he has been invited to meet with SRA officials next week to discuss his position regarding the bust firm. He also claims that repeated attempts to contact the administrators have been ignored. 

The regulator has faced mounting pressure – not least from Khag himself – to intervene in Challinors, but has so far maintained there is no need as in its view clients are not at risk. 

The SRA confirmed that a bankruptcy declaration would automatically suspend a solicitor’s practising certificate. “However,” said a spokeswoman, “this is a personal event and does not necessarily affect the position of the firm, except where it is a sole practice.” 

Regarding meeting Khag next week, the spokeswoman said: “We do not discuss the details of any individual cases with which we are dealing, unless and/or until there is any regulatory action taken, at which time we would publish the outcomes on our website in due course. Any discussions which take place between ourselves and other parties are confidential.” 

Challinors announced last month it was going into administration (24 July 2013). It has since emerged that the firm owes more than £11 million to a range of creditors (30 July 2013). 

A senior executive at the administrators said last week that he anticipated a deal would be cut to sell the firm – either in parts or as a whole – within the next fortnight (12 August 2013).

Griffiths declined to comment. RSM Tenon did not respond to requests for comment.