THE president of Sheffield Chamber of Commerce and 31 other senior lawyers are facing legal action over claims they diverted proceeds from a £21m property deal to themselves – and helped cause the collapse of a major law firm in the process.
Halliwells, which had offices in Manchester, Sheffield, Liverpool and London, went into administration in July 2010 with debts of almost £32m.
Suzanne Liversidge and 31 other partners are alleged to have diverted the proceeds of a property deal, which sprung from Halliwells setting up luxurious new office accommodation in Manchester, to their own separate company. It is alleged the financial damage done by the “secret” transaction helped lead to Halliwells’ demise.
Accountacy firm BDO, appointed Halliwells’ administrators and subsequently liquidators, have already launched legal proceedings against the 32 partners and they are now set to be joined by 36 former senior figures at Halliwells who are seeking damages over allegations the partners concealed the deal from them.
In December 2009, six months before adminstration, Ms Liversidge led an exodus of around 60 staff at Halliwells’ Sheffield office who left to join law firm Kennedys, which opened an office in Sheffield the following summer.
Ms Liversidge, who was the managing partner of Halliwells’ Sheffield office and last year became the first woman president of the city’s chamber of commerce, has declined to comment. The other 31 partners have similarly declined to comment.
A letter of claim, sent out within the last week on behalf of 36 former fixed share members (FSMs) in Halliwells Limited Liability Partnership (LLP), states that the 32 partners “concealed” the transaction from them,
When Halliwells decided to move into leasehold premises in the Spinningfields district in Manchester in 2005, a ‘reverse premium’ of £21.12m was agreed to be paid by the landlord.
The letter states: “The actions of the 32 Spinningfields members led to the reverse premium not being paid to the LLP, as it should have been. Instead, it was paid to Halliwells Deansgate Limited Partnership (HDLP) for the benefit of the Spinningfield Members and... an employee of the LLP... who is understood to have received a substantial ‘bonus’ payment for his participation in the transaction.
“The reverse premium was allocated amongst the 32 Spinningfields members pro rata to the equity points held by each member. No allocation was made to the fixed share partners, despite them having one twentieth of the an equity point in the LLP.
“The diversion of the reverse premium from the LLP to HDLP and thereafter to the Spinningfields members and (the employee) was not disclosed to the other members of the LLP.”
Before 2005, Halliwells had no or minimal bank debt, the letter states. It adds that the costs incurred by the move led to Halliwells having to borrow approximately £18m from the Royal Bank of Scotland.
The borrowing was also concealed from the former FSMs, the letter alleges.
The Spinningfields deal and the RBS loan debts were “a substantial cause” of Halliwells’ going into administration, the letter says.
It continues: “The combination of the bank loan and increased rent on the Spinningfields premises (increased by references to the reverse premium) led to the LLP being unable to pay its debts as they fell due.
“Without these liabilities, the LLP would have been able to continue its business, and would have been able to raise finance to cover
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