KWM-Ripped-Sign

King & Wood Mallesons' (KWM) European arm will file for administration today (17 January), officially calling time on the legacy SJ Berwin business, once one of the UK's top 15 law firms.

Restructuring and recovery boutique Quantuma will be appointed to handle the process, with partner Andrew Hosking named as lead administrator.

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.

An email sent by European, UK and Middle East (EUME) managing partner Tim Bednall to staff states: "The UK firm, King & Wood Mallesons LLP, will appoint administrators today, following the finalisation of terms for the sale (in parts) of almost all of the London and Cambridge practices to a number of other firms, including KWM China.

"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."

The move comes after the firm twice pushed back the administration process, by filing a first intention of notice to appoint administrators on 22 December, and a second last week (10 January).

The first filing named AlixPartners as the proposed administrator, but the restructuring firm subsequently withdrew due to concerns over funding.

Quantuma partner Hosking's experience in the legal sector includes a role on the liquidation of regional firm Challinors, as well as the administration of City firm Davenport Lyons.

The collapse marks one of the largest ever failures in the UK legal market. At its height in 2007-08, SJ Berwin 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 as a positive move by many in the market, but questions have persisted over the integration of the legacy UK practice into the wider firm, which operates as separate partnerships under a Swiss verein structure.

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.

The firm put 100 members of staff on unpaid leave on 4 January and the following week, Bednall told staff that no salary payments could be made as Barclays would no longer authorise the release of funds.

However, a deal has now been finalised for KWM China to keep on 30-40 partners across Europe, including a three-partner office in Frankfurt and a larger presence in London.

Complete details – including the full list of countries in which KWM will maintain a presence – are as yet unconfirmed.