King & Wood Mallesons' (KWM) European arm has filed for administration, in a move that represents the end of the line for the legacy SJ Berwin business and the biggest ever UK law firm collapse.

After a protracted and delayed process as management attempted to secure deals with other firms, restructuring and recovery boutique Quantuma has been formally appointed to handle the administration. Partners Andrew Hosking and Sean Bucknall were appointed joint administrators at the High Court in London this afternoon.

King & Wood Mallesons EUME Services, which holds the firm's employees, has also entered administration. The joint administrators for that process are Hosking, Bucknall, and fellow Quantuma partners Simon Bonney and Carl Jackson.

In a statement, Hosking confirmed redundancies would occur as a result of the process, but did not specify a number.

He said: "We are examining the position closely and exploring ways forward with a view to achieving the best possible return for creditors."

Mr Hosking continued: "Regrettably, there will be redundancies but at this stage it is still too early to specify how many. A small number of employees will be retained for a period to help with the administration."

Ashfords' head of professional and financial risks Sam Palmer has been appointed to manage the billing and collection of remaining files and the allocation of client monies.

The administrators are being co-advised by CMS Cameron McKenna partner Rita Lowe and Steven Cottee of Pinsent Masons.

KWM European managing partner Tim Bednall informed staff about the pending administration earlier this morning in an email, in which he reiterated his distress that KWM had been unable to pay salaries in January after Barclays refused to release further funds as the firm delayed appointing administrators.

He stated: "I am very sorry that it has finally come to this. I am particularly distressed by the fact that salaries were not able to be paid for the last two weeks, for reasons previously explained."

Today's collapse marks the demise of a legacy UK firm that at its height in 2007-08, was ranked 14th in the UK top 50 with revenues of £215m and profit per equity partner of £801,000.

Its 2013 merger with Asia-Pacific giant KWM – the product of the 2012 union of China's King & Wood and Australia's Mallesons Stephens Jaques – was seen at the time as a positive move by many in the market.

However, questions have persisted ever since over the integration of the legacy UK practice into the wider firm, which operates as separate partnerships under a Swiss verein structure, and steps were not taken to rectify longstanding problems at SJ Berwin with partner capitalisation and profitability.

Rising debt levels and issues over partner pay distributions continued to plague the firm, and issues came to a head in late October last year with the resignations of four high profile London partners, including former managing partner Rob Day and UK funds head Michael Halford.

The exits forced the firm to put a £14m recapitalisation plan on hold while it reassessed its financial situation, prompting a revised proposal that would have secured an additional bailout from the Asian arm of the business, had European partners agreed to it.

However, in a vote of no confidence in the business, just 16% of European partners approved the plan in full, leaving management seeking alternatives, including a merger. Discussions with firms including Dentons about a wholesale takeover failed, prompting a team-by-team exodus as the prospect of administration became a reality.

Those securing teams from the firm include Reed Smith and Goodwin Procter, with KWM China also sealing a deal to keep on 30-40 partners across Europe, including a three-partner office in Frankfurt and a larger presence in London.

Firms hiring KWM partners since the four-partner walkout in October:

  • Reed Smith: The US firm has so far taken more partners from KWM Europe than any other firm since October, adding nine partners. These are: London financial regulatory partner David Calligan, London equity capital markets head Delphine Currie, London tax head Gareth Amdor, London financial regulatory partner Tim Dolan, London finance partner Tamasin Little, London corporate partner Mark Sanders, French tax head Sylvie Vansteenkiste, Paris-based EU, competition and regulatory head Marc Levy, Munich competition partner Tilman Siebert and Frankfurt dispute resolution partner Francis Bellen.
  • Goodwin Procter has added six KWM partners to its London and Paris ranks on top of those it has taken during the past two years, along with 15 associates and five trainees. The partners are high profile investment funds partner Michael Halford and London private equity partners Shawn D'Aguiar, Patrick Deasy, Ed Hall and Ajay Pathak.
  •  DLA Piper has added eight KWM real estate partners: London partners William Naunton, Cornelius Medvei, Edward Page, Jeremy Brooks, George Burrha and Bryan Pickup have joined DLA along with a managing associate Omer Maroof. The partners have taken eight lawyers and three trainees with them. DLA has also picked up KWM's German head of real estate Lars Reubekeul and German real estate partner Florian Biesalski.
  • Greenberg Traurig has picked up six partners: Steven Cowins and Marc Snell, real estate partner Matthew Priday, corporate finance partners Michael Goldberg and David Fitzgerald, and tax partner Clive Jones.
  • Addleshaw Goddard has hired five partners: real estate partners William Boss, Simon Tager, Michael Scott and Luke Harvey, as well as construction partner Julia Court.
  • Macfarlanes has hired four partners from KWM: competition partners Tom Usher, Christopher Humpe and Cameron Firth, with former European and Middle East senior partner Stephen Kon joining as a consultant.
  • Bircham Dyson Bell has agreed to take on the whole of KWM's Cambridge office: real estate partner Simon Burson, eight fee earners and two support staff.
  • Stephenson Harwood has hired a three-partner team from KWM in London: private equity partners Jonathan Pittal and Gabriel Boghossian and corporate partner Warren Allan.
  • Baker McKenzie has taken two London corporate partners: Will Holder and Carl Richards. The partners have taken five associates with them.
  • Simmons & Simmons has taken two partners: private equity funds partner Cindy Valentine and banking and finance partner Jen Yee Chan
  • Orrick Herrington & Sutcliffe has hired two partners: London private equity partner Ylan Steiner and Munich private equity partner Christoph Brenner.
  • K&L Gates has hired a three-partner team from KWM's Munich office, led by corporate partner Franz Schaefer
  • Squire Patton Boggs has taken an energy team from KWM led by partner Neil Upton, which includes six lawyers.
  • KWM planning partner Simon Ricketts left the firm to set up the planning boutique Town Legal, taking three staff members with him.