Ex-Halliwells partners face legal challenge from firm’s administrators

The joint administrators of Halliwells are considering taking legal action against the failed firm’s former equity partners.

BDO administrators Dermot Power and Shay Bannon have told creditors to the LLP that they are “likely” to bring proceedings in respect of “claims for repayment of overdrawn drawings, claims for unpaid capital contributions [and] claims for breach of duty and breaches of the Limited Liability Partnership Agreement”.

The administrators have said that the nature of the claims will depend on “the position of the individual member, whether they remained a member at the date of the administration, their involvement in the running of the business and their knowledge of the financial position”.

The question of knowledge of the financial position in particular is a moot point, given that some former members, including those who held senior positions, have argued that they were kept in the dark on the true financial situation and that only a small clique around management were privy to the facts.

However, ex-managing partner Ian Austin has denied this, saying that “we all bear responsibility” for the firm’s collapse (2 August 2010).

A former fixed share member who is among a group of partners looking to sue the ex-equity partners (4 October 2010) said that the revelation from the administrators was irrelevant to their own position.

“I don’t think it’s got any relevance to our position,” the former partner commented, adding that the group is still considering legal action, but that it would be a few months before any claim progressed.

“We’re still waiting to get confirmation from the HMRC on what our terminal loss is. That will be at the end of January,” they explained.

Meanwhile, further mediation is expected this month concerning a claim issued by Himor Group, the landlord of Halliwells’ former building in Manchester’s Brown Street, against former equity partners over rent liabilities.