Judge rules in favour of ex-Halliwells partners

NINE former partners of the failed Manchester law firm Halliwells cannot be pursued by liquidators for drawings taken out of the firm, according to a High Court judge.

Halliwells, which had 100 members and 600 staff, collapsed in 2010 and liquidator BDO has been trying to recover cash paid out to partners prior to its failure.

It owes unsecured creditors £203m, with a large portion of this sum relating to a lease at 3 Hardman Square, Spinningfields. The Royal Bank of Scotland has a secured debt of £17.7m.

In a test case brought by Steven Fennell against Halliwells, Judge Hodge ruled that the terms of a retirement deed signed by nine fixed share partners in March 2010 were clear and they could not be pursued for total alleged overdrawings of £600,000.

Mr Fennell, Judith Bloor, Cameron Clarke, Niall Edwards, David Fearon, Suzanne Liversidge, Helen Snowball, Heidi Swales and Gregor Woods resigned from Halliwells in 2009 in order to set up Kennedys’ Sheffield office. Administrators from the accountancy group BDO in Manchester were appointed in July 2010 and are now liquidators in the case.

In a July judgement, which was published this week, Judge Hodge said: “The fact is that I am satisfied… that the terms of the retirement deed are clear. The LLP thereby waived and released any claim to pursue Mr Fennell (and the other departing fixed share members) for any overpaid drawings and any overpaid tax (which, on the view that I take, does not arise).

“It is, in my judgment, inappropriate, as Miss Hilliard [BDO’s barrister] seeks to do, to seek to shoehorn some ulterior meaning upon the clauses of a professionally-drafted document, so as to give effect to some perceived commercial objective, unless there is clear evidence (which is not the case here) that that objective was both entertained, and shared, by both (or all) the parties to the relevant document.”

Irwin Mitchell represented Fennell while Addleshaw Goddard represented Halliwells and BDO.

In a statement joint liquidator Dermot Power said: “The judgment is only relevant to a small number of fixed-share partners – nine out of a total of 150 – and relates narrowly to the provisions of their Retirement Deeds. The judgment ruled that the joint liquidators could not pursue claims against these partners to recover overdrawings. The decision has not been accepted by the liquidators’ legal counsel.

“In the meantime, the Joint Liquidators continue to pursue multiple other avenues to maximise recoveries for creditors, including action against partners who have sought immunity from liquidation claims.”

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