Failed law firm Halliwells owes £14 million
TRADE creditors are owed more than £14.1m from the collapse of Manchester-based law firm Halliwells, according to a new report prepared by joint administrators Dermot Power and Shay Bannon of accountancy firm BDO.
The report shows that on top of the £17.7m owed to the bank, which is likely to face a shortfall following a three-way carve up of the firm, the firm owed £4.3m to HM Revenue & Customs. It also owed more than £2m to various barristers’ chambers sets, including Manchester-based Kings Chambers.
The report blames excessive property costs in relation to legacy properties it still owned following its controversial move to its 3 Hardman Square headquarters at Spinningfields, through which 35 former partners benefited from a reverse premium of £17.5m.
As a result, although it earned £19m on turnover of £77.8m in the year to April 30, 2009, its earnings continued to drop – a problem which was exacerbated by partners and other staff leaving the firm as its financial position worsened.
The partners began an attempted sales of the business in January, but could not find a buyer willing to take on its liabilities prior to an administration process and a three-way carve up of the firm’s assets was decided on the day of the administrators’ appointment in June.
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London-based Barlow Lyde & Gilbert took on the firm’s insurance business, Hill Dickinson incorporated its Liverpool office and the bulk of its Sheffield office and Birmingham’s HBJ Gately Wareing took over the remainder of its Manchester-based practice, including its corporate, real estate and insolvency teams. A deal for the transfer of Halliwells’ Sheffield-based insurance team to law firm Kennedys had been agreed ahead of the administration period.
The report shows that 83 redundancies were made on the date of the appointment, although 77 of these were kept on through a transitional services agreement, which is due to expire soon. Of these, 11 were offered permanent posts by acquiring firms. Barlow Lyde & Gilbert has also subsequently offered permanent posts to a further 26 support staff.
Administrators have said that once all of the assets have been sold, they intend to place the firm into a creditors’ voluntary liquidation “if a distribution is to be made to the unsecured creditors”.
They have also indicated that their own costs accrued in handling the administration to date have reached £1.13m, for which only £30,000 has been billed to date.
