FORMER Halliwells partners remain locked in a legal dispute more than six months after the firm plunged into administration.
They are arguing over who should pick up the cost of a £3m rent guarantee signed by four of the firm’s partners for one of its former Manchester offices.
An LDP Legal source close to the arbitration revealed around a dozen partners have agreed to settle – but up to 17 remain entrenched.
According to the source, those who have agreed to settle formerly worked at the firm’s Spinningfields office, in Manchester.
When news of the dispute first came to light in September last year, a “war” between the partners was predicted, although hopes of an “old English compromise” lingered.
The guarantee was signed when the firm vacated its St James Court offices on Manchester’s Brown Street in 2005.
Two years later, it moved into Spinningfields. A deal with the property’s landlord saw the firm’s Manchester-based equity partners pick up a share of a multi-million pound cash windfall.
Halliwells collapsed into administration in July, 2010, after struggling to pay its landlords amid the economic downturn.
Its Liverpool and Sheffield offices were acquired by Hill Dickinson, whose head office is in Liverpool.
As part of the deal, Hill Dickinson took on 34 Halliwells partners, including former managing partner Jonathan Brown. All the partners could be made to pay out for the guarantee, but it affects the firm’s 40 equity partners the most, six of whom are now at Hill Dickinson.
The source told LDP Legal: “Some people have settled, not out of merit but the practicality that they want to get on with their lives.”
The source added: “The Spinningfields partners – the ones that took the massive premium – they are the ones who have settled. It’s the non-Spinningfields who have not settled.
“Part of it is that if you move out of one premises to another and you take £28.4m, you don’t leave a personal liability on your old lease.
“It’s a bit harsh for someone who’s not the beneficiary of a transaction to be left with all the detriment.”
The source said it is yet to be agreed that all the partners are liable for the guarantee.
He added: “It’s not certain that there’s a liability in the first place.
“ I think there’s a liability. It’s just a question of how much.
“There’s a break clause in the lease. It’s more about when that clause is relevant.”
