Halliwells’ payout not sole cause of failure says administrator
A CONTROVERSIAL property deal which saw Halliwells’ equity partners share around £17m, was not the sole reason for the law firm’s demise, joint administrator Dermot Power has said.
Although “a lot of fingers are being pointed” about the payout, which was related to the firm’s headquarters on Hardman Square, Spinningfields, BDO partner Mr Power feels Halliwells’ dependency on work from corporate and real estate deals was equally to blame for the failure.
He told TheBusinessDesk.com: “A lot of fingers have been pointed about that deal, both inside and outside the firm.
“Whilst that money would have been a lifeboat for the firm (had it not been paid out), it was not the principal cause of the failure.
“Halliwells’ business model put it very much at the cutting edge of transactional activity and when this pipeline was affected by the downtown, it was badly impacted, so I’d say it was equally to blame.”
Mr Power, who was appointed as administrator to Halliwells on Tuesday night after concluding deals to sell its assets to Hill Dickinson, HBJ Gateley Wareing and Barlow Lyde & Gilbert, said the firm’s woes could have far-reaching consequences for the professional services sector.
“I think we’re going to see a close examination of the LLP model – more stress-testing. I think Halliwells is probably the first big LLP failure and I am sure there will be consequences.
“I think anyone who is lending to an LLP is going to look at this and when they renew will do so more expensively because of a perceived higher risk – this is not going to be good for anyone, law firms, accountants or surveyors.
“Other professional firms will have to pay far greater attention to management and particularly cash management, following the stress-testing of an LLP frame work which has been less than robust,” he added.
More than 30 redundancies, all support staff, were announced on Tuesday and yesterday, while a further 78 Halliwells employees have been kept on to provide support as work is transferred to the new firms. Some more job losses are likely as this work is completed.
Halliwells failed owing around £17m to the Royal Bank of Scotland and further sums to suppliers and contractors.
An administration report will be filed in the next six to eight weeks, which will reveal more about the firm’s financial predicament and detail all its creditors.
