Halliwells grants RBS enhanced rights in loan deal
Halliwells has made the rare move for a law firm of agreeing a loan arrangement which effectively gives a bank security on the firm's assets.Information obtained from Companies House shows that the national law firm agreed a debenture with Royal Bank of Scotland (RBS) which gives the bank a "fixed and floating charge over the undertaking and all property and assets present and future, including goodwill, uncalled capital, buildings, fixtures, fixed plant and machinery".The debenture agreement - made in December and rarely used by law firms - would give the bank greater rights in the event of the firm going into administration, boosting its position as a creditor and giving it greater control of assets.
February 19, 2009 at 02:51 AM
2 minute read
Top 50 law firm's debenture agreement with RBS gives the bank security over assets
Halliwells has made the rare move for a law firm of agreeing a loan arrangement which effectively gives a bank security on the firm's assets.
Information obtained from Companies House shows that the national law firm agreed a debenture with Royal Bank of Scotland (RBS) which gives the bank a "fixed and floating charge over the undertaking and all property and assets present and future, including goodwill, uncalled capital, buildings, fixtures, fixed plant and machinery".
The debenture agreement – made in December and rarely used by law firms – would give the bank greater rights in the event of the firm going into administration, boosting its position as a creditor and giving it greater control of assets.
The value of the loan remains unclear. However, it is believed that it is most likely to be a renegotiation of the firm's existing debt facilities.
Halliwells' most recent limited liability partnership accounts, which cover the 2006-07 year, show the firm had bank loans and overdrafts of £3.73m but borrowings are understood to have increased substantially since this point. In November Legal Week revealed partners had made mandatory contributions, likely to have been as high as six figures for senior equity partners, in a shake-up of its finances.
Halliwells declined to comment on its level of debt but denied it was as high as the £23m suggested by some.
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."
Colin Ives, head of professional services tax at BDO Stoy Hayward, commented: "The use of a debenture is a sign that a bank has greater concerns over the ability of a firm to repay a loan and wants the added security of being able to take a priority charge over the firm's assets.
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