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Friday, 6 August 2010

Re Halliwells Llp & Ors [2010] EWHC 2036 (Ch) (30 July 2010) - solicitors in administration Mr Justice Kitchin (pictured) has handed down his judgment in Re Halliwells Llp & Ors [2010] EWHC 2036 (Ch) (30 July 2010). The case concerns the high profile administration of the solicitors' firm Halliwells LLP and the approval for pre-packaged sales within an administration. The learned judge observed:
"On 20 July 2010 I heard an application by Halliwells LLP ("Halliwells") and Mr Shay Bannon and Mr Dermot Power ("the Administrators"), both Licensed Insolvency Practitioners and members of BDO LLP, for an administration order in respect of Halliwells; the appointment of the Administrators; and for the court's approval of four pre-packaged sales of parts of the business of Halliwells...Halliwells is a national law firm providing a range of legal services, with 116 partners and over 600 employees and offices in Manchester, Sheffield, Liverpool and London...Halliwells has entered into a number of historic occupational leases which have left it with onerous payment obligations to landlords. The burden of these payments, a fall in revenue caused by the departure of several partners and a drop in turnover occasioned by the economic climate have left Halliwells unable to pay its debts as they fall due...In light of these financial difficulties, Halliwells engaged the Administrators on 6 May 2010 in order to assist with the management of the sale of its business... They were also asked to plan for the possibility that Halliwells would enter into an insolvency process.The Administrators have formed the view that Halliwells cannot be rescued as a going concern and that it is not reasonably practicable to achieve the objective of a better result for Halliwells' creditors as a whole than would be likely if it were wound up without first being in administration."
The learned judge concludes, "The evidence before me establishes that the object of the administration is to realise property in order to make a distribution to one or more secured or preferential creditors. Further, the Administrators plainly think that it is not reasonably practicable to rescue Halliwells as a going concern or to achieve a better result for the creditors of Halliwells as a whole than would be likely if Halliwells were wound up. I recognise that my order permits the Administrators to enter into sale contracts which require them to apply a substantial amount of the consideration received for the purpose of paying down PPL obligations, and to that extent repaying the capital of the Transferring Members. These are undoubtedly preferences but they are, as the Bank has put it, driven out of necessity in order to maximise returns in the administration. In all the circumstances they do not, in my judgment, unnecessarily harm the interests of the creditors as a whole."
Picture Credit: http://www.arcs.qmul.ac.uk/council/Images/David_Kitchin.JPG
Posted by John Tribe, KPMG Lecturer in Restructuring, Kingston Law School, Kingston University, Surrey, UK at 08:19 Bankruptcy Blog - moving to Jordans Insolvency web service Legal History Journals