Burness Paull and Levy & McRae face legal action over collapse of $400m hedge fund

Scottish firms Burness Paull and Levy & McRae are facing legal action from the liquidators of Heather Capital over their involvement in the collapse of the $400m hedge fund.

Heather Capital is the now defunct offshore financial empire run by Scottish lawyer turned hedge-fund entrepreneur Gregory King that folded following the financial crisis in 2008.

Burness Paull is understood to have acted for one of the businesses in King’s network of companies, which includes lender Mathon Ltd.

Glasgow firm Levy & McRae is also being sued by Heather Capital’s liquidators EY and is understood to have been involved in handling a Mathon transaction.

EY has launched a series of lawsuits against firms and accountants that carried out work for the hedge fund and its affiliate companies before its collapse.

The exact nature of the actions has not been yet revealed, but liquidator Paul Duffy, a partner at EY, is believed to be trying to retrieve millions of pounds of funds for investors.

A spokesperson for EY confirmed to The Lawyer that “Heather Capital has made a claim against Burness Paull and Levy & McRae via its liquidator” but could not provide any further comment on the ongoing case.

However, a source said: “The liquidators appear to be throwing every line they can into the water to see if they can get a catch.”

The source added that Burness Paull is “expected to be robust in its defence” of the claim and confirmed the claim is thought to be “in the single digit millions”.

In December EY also launched a £100m legal action against Heather Capital’s auditors KPMG to recover investors’ money.

Neither Burness Paull and Levy & McRae would comment on the cases.