Halliwells' liquidator BDO is continuing to negotiate a deal with the defunct firm's former equity partners that could see the group forced to repay some of the controversial 'reverse premium' property payout they received. 

Legal Week has been provided with some details regarding the proposed settlement, but has chosen not to disclose them due to a confidentiality agreement surrounding the mediation.

Mediation between BDO and 32 former equity partners of the collapsed firm has been ongoing for almost a year as the liquidator seeks to recoup some or all of the £21m payout which was shared between the equity partners in 2007.

It has long been anticipated that partners would have to return some of the contested amount. One Manchester-based partner not associated with Halliwells commented: "There's a strong claim they should pay back the whole amount but, if a deal has to be done, then they should be looking at around the 70% mark. Fixed-share members and other employees will be livid if it is less than that."  

The ongoing mediation relates to the £24.5m 'reverse premium' paid in 2007 when Halliwells sold a stake in the freehold of its then new office in Spinningfields, Manchester. The majority of the payment was distributed to equity partners – a move that has been criticised for contributing to Halliwells' subsequent financial problems and ultimate demise.

BDO first moved to recoup the reverse premium in June 2011, sending letters to the ex-partners demanding the repayment of money, before launching a High Court claim against former chairman Ian Austin and 31 equity partners, alleging that they breached their obligations to the firm by keeping the payout.

The two sides subsequently agreed to enter mediation in order to avoid a lengthy court battle, with talks kicking off last April. Addleshaw Goddard has been representing BDO with litigation firm Peters & Peters acting for the majority of the former equity partners.

Halliwells filed notice of intention to appoint an administrator in June 2010, signalling a fire sale of the business in what became the largest law firm collapse ever in the UK. 

The firm's business was divided up, with parts taken over by Hill Dickinson, Barlow Lyde & Gilbert, HBJ Gateley Wareing and Kennedys. 

BDO later estimated that the firm owed more than £190m to unsecured creditors, largely made up of landlord and lease obligations.