Group of former Halliwells partners hit with £21m High Court claim
Halliwells' administrators have launched a claim in the High Court against a group of former partners in a bid to reclaim more than £21m gained through a controversial 'reverse premium' property payout. BDO launched the claim against Halliwells' former chairman Ian Austin (pictured) and 31 other ex-partners in the Chancery Division of the High Court earlier this month (4 July).
July 21, 2011 at 01:12 PM
3 minute read
Halliwells' administrators have launched a claim in the High Court against a group of former partners in a bid to reclaim more than £21m gained through a controversial 'reverse premium' property payout.
BDO launched the claim against Halliwells' former chairman Ian Austin (pictured) and 31 other ex-partners in the Chancery Division of the High Court earlier this month (4 July).
Addleshaw Goddard is advising BDO on the £21.13m claim, with litigation firm Peters & Peters acting for 30 of the 32 defendants.
BDO's claim outlines three main areas where the partners breached their obligations to the firm through the reverse premium property payout.
These are: breaching Halliwells' partnership deed by failing to act in good faith and parting with the LLP's property "otherwise than in the ordinary course of business"; breaching their fiduciary duties to act in the best interests of the firm, not to make a "secret profit" and not to prefer their personal interests over the firm's; and breaching the Limited Liability Partnership (LLP) regulations 2001.
The form goes on to say that in the case that any of the defendants did not commit these breaches, the claimant seeks a declaration that they knew the payments received had been "caused or permitted pursuant to the aforesaid breaches", or that they were "unjustly enriched" at the expense of Halliwells LLP.
The claim also includes a number of orders including that the defendants hold their respective shares of the money owed on trust, that they pay damages or equitable compensation for the breaches, and that interest is paid on all sums owing.
It also states: "that the claimant is entitled to trace the sums received by each defendant representing their share of the sums totalling £21,132,693 into any property held by each respective defendant."
News that the claim has been launched comes after Legal Week reported last month that BDO had issued letters to former partners demanding they repay the money.
The claim relates to the £24.5m paid out to Halliwells' equity partners in 2007 when the firm sold a stake in the freehold of its new office in Spinningfields, Manchester. The majority of the so-called 'reverse premium' was distributed to equity partners – a move that has been criticised for contributing to Halliwells' later financial problems.
A report from BDO in February estimated that Halliwells owed unsecured creditors more than £190m, a figure which is largely made up of landlord and lease obligations. The Royal Bank of Scotland is Halliwells' largest secured creditor, with the bank at one point estimating that it may have to write off £15m due to the collapse.
After Halliwells collapsed last summer, the firm's business was taken over by a number of other firms, with former partners joining Hill Dickinson, Barlow Lyde & Gilbert, HBJ Gateley Wareing (now Gateley) and Kennedys.
In a statement, Peters & Peters said: "The administrators' claim is categorically and absolutely resisted."
- For an in depth account of the Halliwells collapse, see Divided we fall – behind the headlines, the drama and confusion of Halliwells' collapse
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