Allen & Overy (A&O) has landed another role on Northern Rock by advising the Virgin Group on its proposals to the beleaguered mortgage adviser.
Virgin’s group general counsel Josh Bayliss confirmed to The Lawyer that the magic circle firm was advising the consortium led by Sir Richard Branson.
Virgin this afternoon (12 October) made a rescue proposal to the board of Northern Rock, suggesting a cash injection that would see the Newcastle-headquartered bank rebrand as Virgin Money.
A&O is already advising Northern Rock on its funding facility from the Bank of England.
Bayliss said he was happy that this did not present a conflict of interest as it was a separate transaction.
Leading advice to Virgin at A&O is corporate partner Andrew Ballheimer.
Freshfields Bruckhaus Deringer has already raised eyebrows by advising Northern Rock on corporate matters despite already having advised the Bank of England opposite A&O until at least 18 September (see The Lawyer, 8 October). The Bank then instructed Clifford Chance.
Conflicts
Advising Virgin on acquiring Northern Rock whilst (or so recently having been) advising the latter on its BoE funding surely throws up enormous conflicts of interest regarding:
1) the mass of confidential information obtained concerning Northern Rock’s business, assets and financial position whilst advising Northern Rock,
2) knowledge of the actual provisions of the agreements with BoE,
3) advice to Northern Rock on change of control issues under the BoE funding arrangements resulting from a Virgin takeover, etc.
Extraordinary.
A&O/Northern Rock
I think it’s probably ok if the Virgin consortium is not expecting continuing funding from the Bank of England.
Obviously A&O would have had to get the consent of the Northern Rock GC to be able to advise Virgin.
I don’t think it’s a question of law firms getting bolder on conflicts, I just think that in Northern Rock, and in the credit crunch generally, you’re dealing with sophisticated banking clients who will happily give consent. They recognise that these kinds of deals are very complex.
conflict of interest ….really????
It seems like no one cares that much about Northern Rock clients’ welfare. The conflict of interest is not lying in the relation between Virgin, BoE and Northern but in the relation between Northern Rock A&O and the clients of the troubled bank. Clients from the bank can legitimately expect that their interests are taken into consideration. Now there is the risk that their welfare is thrown out of the window for the sake of wheeler dealers.