Halliwells has moved to appoint an administrator as the firm looks to secure a takeover by Hill Dickinson to transfer the bulk of its business and assets.

Halliwells this week filed with the court a notice of intention to appoint an administrator. This process triggered a moratorium on Halliwells' liabilities and is expected to provide a window to negotiate the future of the business, which the firm asserts is fundamentally strong on an operating basis

The expectation is that Halliwells will ultimately be dissolved after the transfer of assets. Halliwells is in discussions with a number of firms but the talks with Hill Dickinson are the most advanced. Barlow Lyde & Gilbert is believed to have expressed an interest in Halliwells' Manchester insurance practice.

As previously reported by Legal Week Halliwells and Hill Dickinson had tentatively explored the option of a merger deal earlier this year.

Halliwells has suffered a turbulent two years in which its profits have fallen sharply and dozens of partners have left, severely depleting its London and Sheffield arms. The firm's difficulties have been attributed to over-expansion and debt, which is currently in excess of £20m.

The top 50 law firm has also previously examined a number of potential merger deals, including engaging in discussions with City firm Manches, which ended last September.

In contrast, Hill Dickinson was a robust performer in 2008-09, growing revenues by 11.9% to £82m – in contrast with Halliwells, which saw revenues dip slightly to £83m.

Halliwells had, however, appeared to have secured a boost this year when the firm renegotiated nearly £20m of bank finance facilities. The move freed the firm from previous loan terms requiring it to maintain a minimum number of equity partners.

Smith & Williamson national head of assurance & business services Giles Murphy commented: "For law firms generally this could make funding more difficult and I think we will increasingly see banks asking partners to make personal guarantees. This will push up the price of funding and increase the banks' need for security.

"For Halliwells, the key will be to act fast – the good people will be snapped up but it has to happen quickly before they lose their clients."

Halliwells and Hill Dickinson declined to comment.