Bank loans to be repaid after former partners' notice period ends

Halliwells has arranged with its lender to delay repaying a number of professional practice loans in a bid to keep cash in the business.

Following the departure of a number of partners, the national firm has agreed with its bank that in six individual circumstances it will delay paying back professional practice loans – money that individuals borrow from the bank to put into the firm on joining the equity. The money will now not be repaid in full until the former partners' official notice period has come to an end, even if the partner has left the firm before the notice period is up.

Halliwells had previously agreed with the bank that it would pay back the loan – understood in some circumstances to be a six-figure sum – within seven days of a partner's departure.

The news comes as it emerges that a number of former partners have drawn more profits than they were due.

In one instance the firm has suggested that an ex-partner offsets money he has overdrawn by paying back part of his professional practice loan himself.

Earlier this year, Halliwells renegotiated £20m of bank facilities to secure its finances for the next three years. As part of the agreement the firm is no longer required to maintain a minimum number of equity partners after coming close to breaching the 37 necessary. Halliwells instead agreed to keep at least £12.9m of capital in the firm.

At the time the firm agreed to lock members' capital not borrowed through a professional practice loan into the firm until the banking facility expires. This means that exiting partners who paid in their own capital to join the equity, or those who left their drawings in the firm to pay off borrowed capital, must wait until 2013 before their capital is returned.