The administrators’ report of Halliwells has been released, revealing the failed law firm’s financial demise has reached a startling £1.13 million.
The report was drawn up by BDO partners and joint administrators Dermot Power and Shay Bannon, and shows that fees of £524,354 have been charged by the administrators but only £30,000 has been received so far.
Another total of £606,082 relates to expenses ran up by the administrators, of which £585,682 had been spent on legal fees for CMS Cameron McKenna and counsel fees of £19,043.
A further £14.1 million is owed to the firm’s unsecured creditors, with HM Revenue & Customs having the largest sum outstanding of all the non-preferential creditors, with a total of £4.3 million.
Other unsecured creditors included Deloitte with £120,332 outstanding and PreicewaterhouseCoopers with £131,036 outstanding.
Property adviser Muller Professional Services is owed £2.4 million and the College of Law is also awaiting £448,293.
The report also revealed that £2.09 million is owed to counsel, barristers and case expert witnesses with sets such as Kings Chambers, Serle Court, No5 Chambers, 3 Verulam Buildings and Maitland Chambers who are all on the unsecured creditors list.
The administrators are recommending the firm should enter into liquidation with Power and Bannon as the appointed liquidators.
The report states: “It is the joint administrators’ recommendation and proposal that once all assets have been realised and distributed in the administration, that the joint administrators arrange for the LLP to move to creditors’ voluntary liquidation if a distribution is to be made to the unsecured creditors.”
In addition, the report showed that on 20 July after the “sales of the LLP’s assets meant that a number of the LLP’s staff were not required in order to meet ongoing business commitments” 83 redundancies had been made.
However, 77 staff also stayed on and entered into a transitional services agreement (TSA), of which 11 have been offered permanent positions by the acquiring firms, Barlow Lyde & Gilbert and HBJ Gateley Wareing, under the Transfer out Undertakings (Protection of Emplyment) (TUPE) regulations.
As well as the six who have been taken on under TUPE by Barlows, the firm has also offered jobs to another 26 currently working under the TSA, who have all accepted the positions.
The rest of the staff who have not had the opportunity of being offered positions are to be made redundant when the TSA expired on 28 September.
Debt Management Today reported on Halliwells at the start of the month when the legal firm partners – who provide extensive conveyancing services to the intermediary market – faced bankruptcy as they had to repay over £2 million in bank loans.
According to The Business Desk, the loans saw partners’ contribute between £20,000 per equity point and £10,000 per point following a request from the Royal Bank of Scotland, which had a £19.8 million loan facility with Halliwells.
Not only did the partners have to repay earlier loans taken with Handelsbanken in 2008, but the outstanding Co-operative loans had to be repaid too.
Reports from legal magazine, The Lawyer, suggested that some partners were liable for over £500,000.
The legal giant was set to become another casualty of the recession when it was reported they owed £20 million to the Royal Bank of Scotland and had filed a Notice of Intention to Appoint an Administrator at the Company’s Court.
Formerly they boasted luxurious offices in Sheffield, Manchester, Liverpool and London, but the firm was dragged down by the recent economic turmoil and had witnessed profits and turnover drop.
Profits for the year to April 30 2009 fell from £23.4 million to just over £17 million, with income down 5% to £77.8 million. Most noticeably, net debt had increased by £780,000 to reach £25.4 million.
Halliwells grabbed headlines in June this year – sending shockwaves through the industry – when it was announced they were going into administration in July following their economic problems, and concluded the break-up and sale of the business the following month.
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