BDO tells ex-Halliwells partners to repay drawings

THE administrators of collapsed Manchester law firm Halliwells is pursuing 14 former partners who left the firm in the wake of its collapse for the return of cash they were paid in its final year.

The 14 individuals are all former partners who did not join one of the four practices which picked up different parts of the former Halliwells businesses and agreed to reimburse partners’ former drawings as part of their settlement.

BDO is seeking repayment of drawings from all former partners for the period between May 2009 and the firm’s collapse in July 2010 during which it did not make a profit.

An update on the administration from BDO states that “certain members of the LLP transferred to other law firms which ensured a commercial realisation of debtors and WIP (work in progress).

“To date, £140,008 has been received in respect of these debts and it is anticipated that further amounts will be recovered from this source.”

The 14 former partners who joined firms other than the four practices with whom administrators BDO agreed a carve-up of Halliwells assets – Hill Dickinson, Barlow Lyde & Gilbert, Gateley and Kennedys – have subsequently appointed law firm Irwin Mitchell to defend themselves against the claims for money being made by the administrators.

Chris Jones, an insolvency partner at Irwin Mitchell, said: “Irwin Mitchell in Manchester has been appointed to represent 14 individuals who were Fixed Share Members at Halliwells LLP during some or all of the period between May 2009 and July 2010 concerning financial demands made against them.

“There is no basis for these claims and we are currently liaising with the administrators.”

BDO’s latest report to creditors shows that Hill Dickinson has forwarded more than £1.3m to repay former Partnership Practice Loans (PPLs) on behalf of the partners who joined its practice. Gateley has repaid more than £1.5m.

In total, the report estimates that it will collect more than £7.8m from the purchasers of the Halliwells business – although only £6.4m was due under the original agreements.

The document, which was filed at the end of July, showed arrears on payments due of £500,000 from Gateley and £232,141 from Barlow Lyde & Gilbert. However, both firms have confirmed that these payments have subsequently been made.

Landlords of Halliwells’ former Liverpool and Sheffield offices have refused to accept a surrender of the firm’s leases. It is also  still awaiting a formal response from Himor Group, who were landlords of the firm’s old Manchester headquarters at St James’s Court, although former partners who personally guaranteed its lease are understood to have settled with Himor out of court.

The landlord of its London office has agreed to take back the lease and re-let the space.

The main outstanding liability of the £191m owed by the firm to unsecured creditors is the £176.5m owed on the lease of its newer Manchester headquarters at 3 Hardman Square, which has yet to be reassigned.

BDO has also launched a claim in the high court against 32 former Halliwells partners who shared the bulk of a reverse premium worth £24.5m for signing the lease from former landlord Allied London.

To date, secured creditor Royal Bank of Scotland has received £2m of the £17.7m it is owed, but the administrator currently has a balance of £2.4m which it has recovered after fees that can be forwarded to the bank.

The administrators’ own fees to date are more than £1.06m based on 5,013 hours of work at an average hourly rate of £212.69. Legal fees accrued within the first 12 months of administration have reached almost £1.26m.