Berwin Leighton Paisner (BLP) may be forced to pay back up to £3m to long-standing client Alpha Airports for damages claimed to have arisen from the firm’s advice on a £7.5m catering contract with Icelandic charter airline Excel Airways.
Alpha had its shares suspended in April until this week and has seen three top executives step down after auditors PricewaterhouseCoopers (PwC) found accounting irregularities in a change to the company’s contract with Excel which BLP advised on.
Ashurst was called in to advise Alpha non-executive directors Terry Stannard and Lesley James as they investigated the contract in the wake of PwC’s findings.
Alpha claims to have suffered £3m in losses relating to the suspension of its shares, and is “in discussions” with BLP to recover costs, according to chief executive Peter Williams.
“There has been an issue and we are in discussions with them [BLP]. The firm has been acting for Alpha for a long time, and continue to do so,” Williams told The Lawyer.
Alpha chairman Graham Frost quit this week, following the resignations of former chief executive Kevin Abott and ex-finance director Heather McRae earlier this year.
The three were alleged to have taken advice from BLP on changes to the Excel contract, which allegedly had the effect of reducing payments by Excel to Alpha over the summer of 2005, and increasing them after October 2005.
While not affecting Alpha’s financial situation, Ashurst and PwC both found it may have enabled Excel to misrepresent its financial statements at a time when its parent, Avion, was preparing to float. Avion listed on the Iceland Stock Exchange in January.
A BLP spokesman told The Lawyer: “Alpha continue to be a valued client of the firm, and we continue to be instructed on new matters by them.”
Ashurst litigation partners Ben Tidswell and Angela Pearson and corporate partners Philip Broke and Nick Bryans worked on the investigation.