Tensions rise over £4m rent liability; 90 partners resign from LLP

The dispute over Halliwells' outstanding £4m in property liabilities has come to a head after 90 ex-partners resigned from the defunct firm's limited liability partnership (LLP).

Filings with Companies House confirm the resignations – including former chief executive Ian Austin and approximately 30 equity partners – which came after a resolution to alter the partnership deed was agreed earlier this month. The changes enabled partners to resign with immediate effect without having to serve a notice period.

The move follows letters sent by litigation partner Paul Thomas to former equity partners asking them to enter into arbitration in order to meet the rent liabilities of up to £4m after he, as one of the four original personal guarantors, received a statutory letter of demand from the landlord of Halliwells' former Manchester offices at St James's Court. Rent had been guaranteed on the premises until 2013, despite the firm vacating the offices in 2007.

The resignations from the LLP, which did not include Thomas, now put into question the liabilities with regard to meeting the unpaid rent.

In a further letter to ex-partners this month, Thomas writes: "The most natural and obvious explanation of your actions is that the scheme has been deliberately kept secret from me, to enable you and the other members to secure a purported advantage in disputing your liability to me under the indemnity. Such conduct is, on the face of it, misconduct, and requires investigation."

As Legal Week went to press, a mediation involving all ex-partners is set to take place in Manchester today (23 September).

Thomas has instructed Kennedys and Maitland Chambers' John McGhee QC while some ex-partners are taking advice from Exchange Chambers' Mark Cawson QC.

However, a number of ex-partners have said it was always their intention to resign from the LLP to avoid being a partner in two firms. While some denied that the move was driven by an intention to reduce their exposure to liability, they did admit it was a by-product of it.

The news follows the publication this month of the first administrators' report on the Halliwells collapse, which shows that total costs incurred by the administration have so far reached £1.13m.