Slater and Gordon's lenders are to take control of the beleaguered Australian firm as part of a recapitalisation plan that will result in the firm's entire board being replaced.

Firm-wide managing director Andrew Grech (pictured) is to step down with immediate effect as part of a recapitalisation plan led by New York hedge fund Anchorage Capital, the firm's main lender.

Once implemented, the plan will see all existing directors resign and a new board selected, with the lenders to own around 95% of Slater and Gordon's equity, with existing shareholders left with the remainder. The lenders, which will be providing a A$40m (£24m) working capital facility as part of the refinancing, currently own three quarters of the firm's secured debt.

Hayden Stephens will continue as Australia chief executive, with Ken Fowlie at the helm of the UK business. All group functions will report through to Stephens.

A statement released to the Sydney Stock Exchange by Slater and Gordon said: "The recapitalisation is intended to provide the company with a sustainable level of senior secured debt and a stable platform for its future operations in both Australia and the UK."

Slater and Gordon became the world's first listed law firm when it floated on the Australian stock market, but has been grappling with huge debts as a result  of its controversial acquisition of UK insurance company Quindell's professional services arm in March 2015.

Having successfully launched in the UK in 2012 via a takeover of Russell Jones & Walker, the Quindell deal resulted in the firm posting losses of A$425.1m (£262.6m) for the six months to 31 December 2016, having previously announced a loss of A$1.02bn (£628.8m) for first half of that year.

The losses included a A$350.3m (£216m) "impairment charge" on the value of its UK business – effectively a write-down.

It emerged last year that Slater and Gordon planned to sue Watchstone Group, formerly known as Quindell, over the £637m acquisition of its professional services division. After the purchase, Quindell came under investigation by the UK's Serious Fraud Office for its business and accounting practices.

Shares in the firm have seen their value plummet since the UK difficulties emerged.

Other lenders include Davidson Kempner, York Capital Management, Taconic Capital and River Birch Capital.