Slater and Gordon (S&G) is 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 statement added: ‘S&G has previously informed the ASX that £50m of the purchase price for the acquisition would be held in escrow against warranty claims that may arise under the share purchase agreement. If claims made under that agreement cannot be resolved prior to the release date of the escrow (currently 29 November 2016), and subject to compliance with threshold requirements under the share purchase agreement including a merits assessment by an independent barrister, part or the whole of that amount may be retained in the escrow amount subject to resolution of the claim.’
In response, Watchstone said in a statement that it had received a preliminary correspondence on behalf of S&G notifying it of a purported claim and that ‘the company does not believe that there are grounds for a claim to be brought and will defend it robustly.’
In response to the £50m held in escrow, Watchstone added: ‘Following 29 November 2016, monies will be released to Watchstone from the warranty escrow unless, inter alia, Watchstone receives an opinion of a senior independent barrister stating that a given claim is more likely to succeed than not. The opinion will also quantify what such claim, if successfully brought against Watchstone, would be valued at and this amount would then be retained in the warranty escrow until the purported claim was resolved with any excess up to the £50m released to Watchstone.’
In February, S&G announced its plans to restructure its UK operation, as it announced disappointing global results including the goodwill impairment. It 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.
At the end of March the firm’s general counsel and company secretary Moana Weir resigned after spending just two months at the firm. In February the firm’s UK chief, Neil Kinsella, announced his retirement as UK head of general law, with Siri Siriwardene replacing him.