European partners at beleaguered King & Wood Mallesons (KWM) have been given a lifeline by the Asia partners at the firm, who have agreed to stump up cash in exchange for a lock-in and a capital contribution.
A partnership meeting was held for the European and Middle East arm of KWM which has amassed more than £30m in debt, yesterday (10 November) and the plans revealed.
As first reported by RollOnFriday this morning (11 November), partners at legacy SJ Berwin were told if they continue with the recapitalisation plan of putting in around £14m in the firm and agree to stay for 12 months, then China will stump up the rest of the cash.
The deal is subject to a vote, of which at least 70 partners (around 60% of the Europe and Middle East partnership) must agree to. The partners have until the week beginning 21 November to agree the deal. In July, 98% of the partnership had voted in favour of the original recapitalisation plan.
The deal was revealed after Legal Business reported yesterday global managing partner Stuart Fuller has stepped down from his leadership role, and will return to practice in Sydney in 2017.
The recapitalisation plan was halted last month after the loss of four high-billing partners, funds partner Michael Halford, former managing partner Rob Day and corporate finance partners Andrew Wingfield and Jonathan Pittal.
The new leadership for the Europe and Middle Eastern partnership, managing partner Tim Bednall and senior partner Michael Cziesla, flew to China last week to talk about the future of the firm.
KWM has been in talks with Morgan Lewis & Bockius for a merger, discussions which had become strained following the departure of key partner Halford.
A former KWM partner told Legal Business: ‘Where was all this a year or two years ago? It looks like it’s too little too late. There was a realistic chance of avoiding this, but the question is where are they now? People at the firm would say this was predictable, but there have been a number of missed opportunites.’
Read more on KWM in ‘Comment: The moment of truth arrives in the SJ Berwin saga’
For an in-depth assessment of KWM, subscribers can see our July cover feature ‘Branded’