Joint King & Wood Mallesons (KWM) EUME administrators Andrew Hosking and Sean Bucknall of Quantuma have said partner exits accelerated the demise of the practice in their first interim report to creditors.
Quantuma said in a statement: ‘Administration was the only resort left to the firm, which saw an accelerating rate of partner and staff departures during 2016 as the extent of the firm’s financial difficulties became apparent.’ The report also reveals KWM sold its Spain business to the partners.
Hosking and Bucknall were appointed on 17 January when the firm entered administration.
Their report reveals that seven partners and their work in progress (WIP) and accounts receivable had already transferred to Goodwin Procter on 10 January. The sales the administrators completed after their appointment included six partners, WIP and accounts to Greenberg Traurig, eight to DLA Piper, 11 to KWM China and 12 to Reed Smith.
The report reveals that on an individual basis, KWM has now entered into agreements with approximately 40 partners for their departure, agreed to by the administrators. It also shows that at 30 April 2016 KWM comprised of 163 partners and over 900 staff, generating revenues of approximately £177 million to that date, with the majority of revenue and profit deriving from the UK, France and Germany. It also says AlixPartners were originally planning to be adminstrators but pulled out due to lack of funding.
Hosking (pictured) said: ‘Since we were formally engaged on 17 January we have taken active steps to progress negotiations and agree commercial terms with interested parties who had already expressed interest in acquiring parts of the business.’
He added it was too early to present a full picture of the reasons for the collapse of legacy SJ Berwin but it was clear that, despite attempts to restructure to reduce overheads in early 2016, it had proved impossible to reach agreements on funding and the way forward with partners.
‘By 22 December 2016, it had become apparent that KWM required funding above the level available to it and that it would not be in a position to meet salary costs beyond early January 2017 and to meet the partners’ Schedule D1 tax liability due on 31 January 2017,’ Hosking added.