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TLT to defend ex-Halliwells 26-strong fixed share partner group

TLT is to defend a group of 26 former Halliwells LLP fixed share partners in a continued dispute with the liquidator over liabilities related to the collapse of the Manchester-based law firm in 2012.

The dispute has been ongoing for five years with the liquidator seeking millions of pounds from former fixed share partners in repayment of drawings and tax payments, and a contribution to the firm's losses made in the run up to the firm's demise.  

The claims are based on fixed share members' purported knowledge of the firm's insolvency prior to it entering a formal administration process; something fixed share members dispute. Indeed, the liquidators' own counsel suggested in Burns that certain full members had perpetrated a fraud on the LLP. 

John Lord, commercial litigation partner at TLT and lead partner on the case said: "Having reviewed all the documents, there can be no doubt that full and frank disclosure of the firm's financial position and the reverse premium was not given to fixed share members. This is the corner stone of the fixed share members' defence. It will also present some difficulties for those who failed to comply with their duties to other members."

The case will also seek to get clarity on the specific claims against each fixed share member. Much of the delay to date in this case has centred on the Liquidator not responding to multiple pre-action disclosure requests for this information, with some requests having been outstanding for four years. Instead, the Liquidator has taken an approach that fails to recognise that different partners retired from the LLP at different times. 

John Lord, commented: "This case rests on who knew what and when. The liquidator therefore has to accept that properly articulating his claims against each member based on the dates when that member retired from the LLP is absolutely essential."

TLT is also instructed to represent Stephen Fennel and eight other former Halliwells partners at the Court of Appeal in April. This follows the Liquidator's decision to appeal October's High Court ruling that the group could not be pursued for drawings and tax. The group of nine partners resigned from Halliwells to move to Kennedy's Sheffield office, six months before Halliwells filed a notice of its intention to appoint an administrator.

  • Halliwells was a Manchester-based fi​rm with 100 partners and 600 staff at offices in Manchester, Liverpool, Sheffield and London. The firm collapsed in July 2010, with Hill Dickinson, Barlow, Lyde & Gilbert (now Clyde & Co), Gateley and Kennedys each taking over parts of the business. 
  • Section 214A Insolvency Act 1986 provides that the liquidator of an insolvent LLP can bring proceedings to recover property withdrawn from the LLP by its members or any shadow member in the two years before the LLP was wound up. To successfully recover property withdrawn by a member in this way, a liquidator must prove to the court that, on the balance of probabilities, the relevant member withdrew property from the LLP and knew of the LLP's impending insolvency at the time of the withdrawal. Also, that they knew (or ought to have known) that there was no reasonable prospect of the LLP avoiding insolvent liquidation.
  • The Fennell case relates to a group of nine partners who left Halliwells before its collapse in 2009. The dispute concerned whether the retirement deed they negotiated on departure protected them against any subsequent claims to recover monies paid to them by Halliwells. The appeal is scheduled to be heard at the Court of Appeal towards the end of April. TLT partner Julien Luke is advising.


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