Hammonds Direct, the conveyancing business spun off from Hammonds in 2001, will enter administration this week.
Walker Morris appointed” class=”inline_image inline_image_left” src=”/pictures/web/images/15717_hammonds-bradford-office90.jpg” />Hammonds Direct, the bulk conveyancing business spun off from Hammonds in 2001, will enter prepackaged administration this week.
The company, which has a turnover of more than £14m and employs 250 people in Bradford, has been hit by the collapse of the conveyancing market. A source said margins on the business had fallen from around 80 per cent to less than 20 per cent.
It is understood that Hammonds Direct rents its office space from Hammonds, with a collapse possibly causing a £2m to £3m annual shortfall for the law firm.
Walker Morris has scooped the lead role advising on the administration. Deloitte has been appointed as administrator, with Walker Morris partner Phillip Mudd advising on the proceedings.
Peter Crossley, managing partner of Hammonds, said: “It’s been an entirely separate business for over eight years. There are a number of options and we don’t have clarity where the business is going.”
Former Hammonds senior partner John Heller became chief executive of Hammonds Direct in 2002 after helping to set up the company in 1995. Sources have said the management is in discussions with several potential buyers to sell the business as a going concern.
A videoconference crisis meeting was convened on 8 January in the Leeds and London offices of Hammonds to inform the partners of the difficulties at Hammonds Direct.
The business is regulated by the Law Society and is fronted by a private partnership made up of current and former Hammonds partners. The partners are also shareholders of the limited company.
The company, which has a turnover of more than £14m and employs 250 people in Bradford, is understood to have been hit by falling margins in the conveyancing market. A source said that margins on the business have fallen from around 80 per cent to less than 20 per cent.
One Hammonds Direct shareholder said there was “no question” of any action being taken against the company’s management, adding: “We know full well that the core business they [Hammonds ;Direct] operate in is remortgages, and that has fallen off a cliff.”