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Retirement terms: Former partners win exemption from Halliwells liquidator

Steven Fennell, a former Halliwells partner, has won a High Court declaration that stops Halliwells’ liquidators’ claim of £125,000 against him for alleged overdrawings.

The case involved former partner Steven Fennell, who was also used as a test case for eight other partners – Judith Bloor, Cameron Clarke, Niall Edwards, David Fearon, Suzanne Liversidge, Helen Snowball, Heidi Swales and Gregor Woods – who all left Halliwells for Kennedys and who all agreed to be bound by the decision.

HHJ Hodge QC found that the partners signed a retirement deed before the collapse of Halliwels, and that it exempted each partner from facing claims in relation to overdrawn current accounts and tax reserve accounts.

The deed was signed by all nine partners before the collapse of Halliwells in July 2010 – all who left to join Kennedys Law to set up an office in Sheffield.

HHJ Hodge QC said in the judgment dated 22 July 2014, but only released recently, that ‘by the Retirement Deed the LLP released and/or waived and/or is barred from pursuing claims against the claimant to recover monies paid on account of profits and monies paid by the LLP to HMRC, as set out in the letter from the solicitors of the administrators’.

Irwin Mitchell represented Fennell, instructing Jonathan Adkin QC of Serle Court, while Addleshaw Goddard represented Halliwells and its liquidators, and instructed Lexa Hilliard QC of 11 Stone Buildings.

In 2013, Halliwells’ liquidator BDO tried to negotiate a deal with the defunct firm’s former equity partners. Halliwells filed notice of intention and went into administrator in June 2010, which resulted in the sale of the business in what became the largest law firm collapse ever in the UK. The firm’s business was divided up, with parts taken over by Hill Dickinson, legacy firm Barlow Lyde & Gilbert, HBJ Gateley Wareing and Kennedys.

Commenting on the judgment, a spokesperson for Dermot Power, joint liquidator of Halliwells, said: ‘The judgment is only relevant to a small number of fixed-share partners – nine out of a total of 150 – and relates narrowly to the provisions of their Retirement Deeds. The judgment ruled that the joint liquidators could not pursue claims against these partners to recover overdrawings. The decision has not been accepted by the liquidators’ legal counsel and the joint liquidators intend to appeal. In the meantime, the joint liquidators continue to pursue multiple other avenues to maximise recoveries for creditors, including action against partners who have sought immunity from liquidation claims.’