Linklaters gets in on Torex administration

Linklaters has advised on the largest pre-packaged administration in 2007, the sale of troubled software company Torex Retail’s operating subsidiaries.

The magic circle firm advised Torex and the joint administrators of the company, Richard Heis and Mick McLoughlin of KPMG, on the sale of its operating subsidiaries to Cerberus European Investments for £205m.

Linklaters undertook a salvage operation of Torex after the Serious Fraud Office (SFO) launched an investigation into the software company’s dealings.

The SFO started its inquiry after Torex Retail had been in financial difficulty since the beginning of the year and was the subject of whistle-blowing by certain senior management in relation to unusual accounting transactions. At the same time, its shares were suspended from trading on AIM.

The magic circle firm set up a committee of Torex directors, who were not involved in the alleged fraud, to see if it could rescue the company, but finally opted for a pre-packaged administration. Under such a structure the buyout package is agreed before administrators are approached.

Corporate partner Stephen Blackshaw, one of the lead partners on the sale, said: “To what must be the relief of the employees and customers, the operating business was successfully moved over to the buying company so their positions are secure.

“Unfortunately for the creditors and shareholders the plc was left with more debt than assets, which means the shareholders were left with nothing.”

In addition to Blackshaw, Linklaters’s team included banking partner Robert Elliot, restructuring partner Rebecca Jarvis and litigation partner Nick Porter.

Allen & Overy acted for Torex’s banking syndicate and Ashurst for Cerberus (, 22 June).