Midlands firm Challinors has filed a notice to appoint administrators following a meeting between the partners on Monday.
The firm notified the High Court in Newcastle yesterday of its intention to appoint Eric Walls and Wayne Harrison of KSA Group as administrators.
Partner Fiona Debney chaired the Monday meeting in which she told partners that the purpose was to consider the “financial difficulties of the partnership and what action it could take”.
The notice, seen by The Lawyer, states: “In particular, the chairperson reported that the meeting was to consider whether it was appropriate to file note of intention to appoint administrators to the partnership with a view to the partnership entering insolvent administration.”
Challinors’ senior partner Paul Griffiths told The Lawyer that the firm is setting itself up for a sale.
He said: “It’s a good news rather than a bad news story as far as we’re concerned as we’re positioning ourselves for a sale. These steps have been taken to protect the position pending the sale.
“In the interim the business continues to trade normally and the interests of our clients and staff have been safeguarded.”
The move comes just a week after it emerged that the firm had called in corporate recovery specialists about the future of the firm (18 July 2013).
High Court proceedings had been issued against Challinors’ 14 partners by games designer Cosmic Concepts, demanding repayment of a £250,000 loan. Cosmic Concepts director Bally Shanker says he made the loan to 14 partners of Challinors in January.
KSA was appointed by Challinors on 29 May to assist it with its current financial position while Flint Bishop head of litigation, Qamer Ghafoor, has been instructed to represent Cosmic Concepts in the case. Challinors is currently handling the dispute in-house.
Ghafoor told The Lawyer that the firm would still pursue the partners involved in the case.
A spokesperson at the SRA said it is unlikely that they will intervene in this case as this is not likely to be an administration. He said: “There is no need at this time for regulatory action because clients are not currently at risk.”
Additional reporting by Jonathan Ames