A group of 34 former Halliwells fixed-share partners (FSPs) have won a High Court battle against the failed firm’s liquidators, BDO, after the court ordered the defendant to disclose previously withheld documents concerning the administration.
Irwin Mitchell insolvency partner Chris Jones was instructed by the group last summer (15 August 2011) to bat off claims made against the group by the then administrators – now the liquidators – BDO partners Shay Bannon and Dermot Power. BDO was aiming to recover drawings paid out in the run up to Halliwells’ collapse, as well as tax payments made on behalf of partners at the firm.
Jones argued that the liquidators should disclose documents understood to show how Halliwells had received advice from Deloitte prior to its administration, which may clear up issues surrounding tax payments and the allocation of terminal loss relief.
An initial application to view the documents in February 2012 was refused by the liquidators.
Registrar Christine Derrett, sitting in the Companies Court, however,agreed with Irwin Mitchell and ordered BDO to hand over the Deloitte files and pay £3,000 in costs last week (4 September).
Jones will now review the files and continue to advise the fixed-share members on their defence against BDO’s claims. The next hearing date is not yet known.
In a statement, Jones said: “My clients believe that there is no basis for the claim against them made by BDO and have spent a significant amount of time investigating the actions of the full members of the LLP in the period up to the administration. A considerable amount of information has been sought as part of this process, and I’m pleased that this decision has been reached as it means that this work can continue.
“Quite simply, this investigation will ascertain the clients’ position with regards the conduct of the full members prior to administration, given both the potential claims against our clients and the losses incurred by them as a result of the LLP’s administration.”
BDO instructed Addleshaw Goddard insolvency partner Alison Goldthorp and 11 Stone Building’s Lexa Hilliard QC. Irwin Mitchell’s Jones instructed Serle Court’s Jonathan Adkin.
In a statement Power said: “We are very surprised to see this being spun as a victory against BDO. The facts are these: Irwin Mitchell made a request for third party documents from the liquidators. As liquidators, we cannot disclose confidential documents – especially those from a third party – without an order of the court. We therefore said there would be no disclosure without a court order, upon which Irwin Mitchell then made an application to court.
“Prior to the hearing, we indicated that we would not oppose the disclosure of the third party documents if the court considered that Irwin Mitchell’s clients were entitled to them. The disclosure of certain documents was ordered at the hearing, and the court will consider whether additional documents from third parties should be disclosed at a further hearing in October.
“Applications for disclosure of documents are common in this sort of case. The court order has no impact on BDO’s ability to fulfil its duties as liquidators and we continue to seek the best possible outcome for all Halliwells creditors”.