Revealed: The £12m debt of Wirral law firm Lees Lloyd Whitley

Nov 18 2009 by Alex Turner, Liverpool Daily Post

Lees Lloyd Whitley's premises at Riverside Park, Wirral _300

CREDITORS of collapsed Wirral law firm Lees Lloyd Whitley (LLW) will today be told by administrators that they are expected to lose £10m.

The 190-year-old firm went into administration in September – but only after the firm’s partners had broken it up, resulting in 70 redundancies and with staff owed £850,000.

The administrators have received claims totalling £11.8m from creditors. They also have several investigations ongoing centred around the transfer of work to other firms, a possible breach of contract which was a factor in the firm’s demise, and a complaint about whether the partners continued to trade beyond the point when they knew the firm was “destined for insolvency”.

LLW’s equity partners are expected to enter into Informal Voluntary Arrangements (IVA) or become bankrupt because of the firm’s collapse. LLW was not a limited liability partnership (LLP), which would have provided protection for the partners.

The scale of the firm’s losses are much larger than originally believed, with the firm owing £11.8m, of which all but £71,207 is to unsecured creditors.

LLW’s landlords, Riverside Park, are owed £3.27m and its bank, Allied Irish Bank, is owed £2.02m.

Former employees are owed £490,000 in wages, holiday and redundancy pay, but some senior members of staff had also loaned the firm money in October, 2008, which they were told would “get the firm through the next 18 months”.

A total of £357,000 was owed to 11 salaried partners and staff, with individuals having loaned up to £50,000 each.

Joint administrators Jonathan Booth and Robert Rutherford, of Liverpool insolvency practitioners Parkin S Booth, have submitted their proposals to creditors, which will be discussed at a meeting in Liverpool this morning.

Finance firm Hampshire Trust will recoup about £1.1m of the £1.9m they are owed through arrangements with the work transferred to other law firms.

The administrators expect to generate realisable assets of just under £500,000 – which leaves an estimated shortfall of £10.2m.

The administrators believe the unsecured creditors will receive some money but said it was “not possible to gauge the timing or extent of the return” at this stage.