Halliwells secures RBS loan against assets
LAW firm Halliwells has entered a loan agreement, giving its bank security against all of the firm’s assets.
The Manchester headquartered firm agreed a debenture with the Royal Bank of Scotland in mid-December, which is understood to be part of a renegotiation of the firm’s existing debt facility.
It is unusual for a law firm to use its assets as security against a loan, as partners usually take on the risk.
The agreement significantly strengthens the bank’s position as a creditor, should the firm go into administration and gives it greater control over assets. It also gives the bank the power to appoint an administrator.
The fixed charge debenture covers all assets, including property, goodwill, fixture and fittings, rents receivable, stocks, shares and other securities, intellectual property, licences, claims and the benefits of any hedging arrangements.
Managing partner Ian Austin has recently suggested that the firm is interested in taking over smaller niche law firms. However, TheBusinessDesk understands that the loan extension, the value of which is not known, was not made to fund this.
A spokesperson for the firm said: “Halliwells has a term loan. The loan is repayable in May 2011 and is secured by a debenture.
“Our accounts will be filed shortly and they will show the firm is in a strong position. The strength of our business lies in its diversity and our client base has never been stronger.”
A legal insider told TheBusinessDesk that although rumours abound that the firm is struggling because of the recession and is paying around £8m in annual rent and service charge for its opulent headquarters at 3 Hardman Square on Spinningfields, it is not in any danger and the deal has more to do with the bank’s increased aversion to risk.
Halliwells, which employs more than 750 people across the North West, has like its rivals been hit by the slump in the once vibrant commercial property and corporate finance sectors and had cut around 50 jobs in these departments in the last 12 months.
