RBS loses £15m from Halliwells’ collapse

ROYAL Bank of Scotland is expected to lose around £15m from the deal to carve up Manchester-based law firm Halliwells, it has emerged.

The firm was placed into administration last month after its partners concocted a deal to break-up the business’s operations and sell off various parts of the business to four other practices.

The sales were expected to raise £12m to pay back at least half of the £22m owed to the bank but it is believed that the four practices which acquired various parts of the business will pay a maximum of £7m for its assets.

Liverpool-based Hill Dickinson, which has acquired Halliwells’ Liverpool office and most of its Sheffield office, will pay a maximum of £1.88m while Barlow Lyde & Gilbert is paying no more than £2.5m for the firm’s core insurance practice.

HBJ Gateley Wareing is paying a maximum of £2.55m over a five-year period for the core Manchester business – the bulk of which will be due next year. Kennedys has paid just £125,000 to secure the services of the firm’s Sheffield-based insurance team.

Joint administrator BDO is also likely to point towards the property deal entered into by the firm as a contributory factor in Halliwells’ downfall as it “significantly increased fixed operating costs”.  This, coupled with partner departures concerned about its financial health and media speculation about the firm’s viability, is believed to have contributed towards its downfall.

The firm’s net profits are believed to have slumped from £8.5m in the year ending April 2007 to a net loss of £1.8m in the year to April 30 2009. Figures for 2010 have yet to be obtained.

At the time of its administration, Halliwells had 690 employees and 116 partners. It is believed to have been facing creditor pressure from several fronts, including former partners who were owed money by the firm, its landlord (who was owed money after the firm missed its June quarterly payment) and from contractors who undertook work fitting out its 3 Hardman Square headquarters at Spinningfields.