Administration of KWM
The administrators of Quantuma have acted quickly to achieve the best possible returns for creditors of law firm KWM which collapsed early in 2017.
An interim report to creditors by joint administrators Andrew Hosking and Sean Bucknall reveals that 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.
Hosking and Bucknall were appointed on 17 January 2017 and immediately set about renegotiating terms of the sale of parts of the business to other law firms.
Prior to the administration, seven partners, their work in progress (WIP) and accounts receivable had transferred to Goodwin Proctor on 10 January.
Sales completed by the administrators on appointment included:
- Six partners, WIP and accounts receivable to Greenberg Taurig
- Eight partners, WIP and accounts receivable to DLA Piper
- 11 partners, WIP and accounts receivable to KWM China
- 12 partners, WIP and accounts receivable to Reed Smith
- The sale of King & Wood Mallesons in Spain to the partners
On an individual basis, KWM has entered into agreements with approximately 40 partners for their departure, agreed to by the administrators.
The report paints a picture of KWM as a global law firm consisting of KWM China, Mallesons Stephen Jacques in Australia and SJ Berwin in Europe.
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.
Andrew Hosking 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.
“We have engaged with Samantha Palmer of Ashfords to manage communications with the Solicitors Regulation Authority (SRA) to ensure it was fully updated as to the intentions of KWM.
“This was intended to reduce the risks of regulatory action, including an intervention, to benefit the interests of all creditors.”
He said it was too early to present a full picture of the reasons for the collapse of KWM 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.
As part of the earliest restructure attempts, 20 partners left KWM and a number followed of their own volition.
He said that extensive and detailed negotiations on a rescue package continued throughout 2016 but ultimately a proposal for a revised support package was not supported by a sufficient number of partners of KWM.
A number of key partners left KWM in the latter part of 2016, further impairing its viability through loss of revenue and repayment of partner capital.
Mr Hosking said: “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.”
As a result, KWM filed a notice of intention to appoint AlixPartners as administrators on 22 December 2016 to provide protection for KWM and to enable a number of sales to be negotiated and completed.
On 9 January AlixPartners informed KWM that it would not be able to taken an administration appointment due to lack of funding.
On 10 January a further Notice of Intention to appoint administrators was filed with Andrew Hosking and Sean Bucknall of Quantuma as the nominated administrators, a process that was completed with their appointment on 17 January 2017.
For further information, please contact:
Andy Skinner, Managing Director, ASAP PR – 07990 978257
Marie Wadeson, Head of Marketing,
Quantuma LLP, Vernon House, 23 Sicilian Avenue, London, WC1A 2QS
Tel: 07464 545678
Notes to Editors
Quantuma LLP is a leading restructuring and insolvency practice delivering partner-led solutions to businesses and individuals facing financial distress with offices in London, Southampton, Marlow, Watford, Brighton and Bristol.