Australia-listed Slater and Gordon (S&G) is pressing ahead in its battle to recover some of the money it paid for Quindell’s professional services division last year, after an independent barrister declared the claim has merit.
In September it emerged S&G was gearing up to sue Watchstone Group, formerly known as Quindell, following the £637m acquisition of the UK company’s professional services division in 2015.
In a statement to the Australian Stock Exchange (ASX), S&G said it had advised Watchstone that it and/or Slater and Gordon UK (SGH UK) intends to bring claims against Watchstone arising from the purchase of Quindell’s professional services division.
The S&G has since obtained an opinion from an independent barrister in respect of the warranty escrow relating to the sale, and announced that it had obtained a ‘positive merits-based opinion from an independent barrister.’
The statement added: ‘Having now satisfied that requirement, the £50m currently held in escrow against warranty claims that may arise under the share purchase agreement will continue to be held in escrow until such time as claims notified under the agreement are resolved.’
In response Watchstone said it received a copy of the opinion and it has shelved £50m to be retained in the warranty escrow account until the claim is resolved.
It added: ‘The opinion is solely for the purpose of determining whether the warranty escrow may be released to Watchstone at this time. It does not pre-judge the outcome of any legal proceedings. Watchstone remains satisfied that the warranty claim has no merit and will defend it robustly if proceedings are brought.’
The company will now not proceed with its further capital return to shareholders until the warranty claim detailed above is resolved. As of late November Watchstone had cash of £83.1m (excluding the warranty escrow).
The latest update in the case follows a turbulent year for the firm, which has also been restructuring its UK operation after announcing disappointing global financial results. It additionally had a two month window until the end of March from its banks to deliver a repayment plan by the end of this month for its debt of A$741m, and reached agreement with its banks in May.