Halliwells fixed-share partners level new claims at equity partners
A group of ex-Halliwells partners have been issued with a letter by former fixed-share members threatening legal action on the grounds of misrepresentation. The letter, which was sent by Irwin Mitchell on behalf of 14 former Halliwells fixed-share partners, levels a number of complaints at the equity partners who each received a share of the defunct firm's controversial £24.5m ''reverse premium' property payout.
October 14, 2011 at 10:01 AM
3 minute read
A group of ex-Halliwells partners have been issued with a letter by former fixed-share members threatening legal action on the grounds of misrepresentation.
The letter, which was sent by Irwin Mitchell on behalf of 14 former Halliwells fixed-share partners, levels a number of complaints at the equity partners who each received a share of the defunct firm's controversial £24.5m ''reverse premium' property payout.
The letter states that the equity partners who accepted the payment failed to act in good faith relating to the other members of the partnership.
The payout was received in 2007 when the firm sold a stake in the freehold of its new office in Spinningfields, Manchester. The equity partners then distributed the money among themselves – a move that has been criticised for contributing to the firm's subsequent financial difficulties.
The letter goes on to accuse the partners of changing the firm's limited liability partnership (LLP) deed shortly before it collapsed in order to make the allocation of terminal loss relief more favourable for full equity partners.
As previously reported by Legal Week, former Halliwells' partners are in negotiations with HM Revenue & Customs (HMRC) about the defunct firm's taxable profits and losses during the financial year ending 30 April 2010 and for the period up to its collapse on 20 July that year.
Partners are seeking to offset the firm's losses against tax either owed or paid on their earnings, with some estimating that those at the top of the equity when the firm went bust could receive a six-figure sum from HMRC.
The deed is understood to have been changed so that in the event of a loss, equity partners would vote on 1 May 2010 as to how it should be allocated. When the firm made a loss, the partnership voted to allocate any future terminal loss relief on a pro-rata basis, depending on a partner's profit-sharing points.
Commenting on the letter, one ex-Halliwells equity partner said: "The LLP deed was changed a number of times during 2010, including clarifying and confirming that any tax losses would be allocated by a resolution of those who were equity partners on the 1 May 2010.
"Subsequently, the tax losses were allocated on a pro rata basis depending on a partner's profit sharing points in accordance with a vote pursuant to the LLP deed and the requirements of tax legislation."
In a statement, Irwin Mitchell partner Chris Jones said: "Our clients are aware of the recent statements in the press. We and they have spent a significant amount of time investigating the actions of the full members of the LLP in the period to the date of the administration order and those investigations are continuing. A considerable amount of information is being, and will continue to be, sought in this regard.
"The aim of the investigations is to ascertain our clients' position as regards the conduct of the full members prior to administration given both the potential claims against our clients and the losses incurred by them as a result of the administration of the LLP. Our clients wish to reserve their position until these investigations have been completed."
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