HMRC is seeking a judicial review of the SRA's handling of the collapse of Manches.
The firm's financial woes were widely known long before it went under. Although when RollOnFriday pressed the firm's Managing Partner about its troubles in July 2013, he said "we are seeing the benefit of a good upturn in our transactional business and our cost-cutting programme. We'll be announcing a number of lateral hires soon. Roll on Monday". Sadly he was talking through his arse - by October Manches had gone into administration. And Penningtons, which had previously considered merging with the firm, picked it up for a bargain £500,000. Its creditors were left with nothing.
Manches is not alone in going through that sort of pre-pack redundancy. A number of firms have done so recently, royally shafting both their creditors and their own staff in the process. The SRA could prevent this by declaring such behaviour is conduct unbecoming of a solicitor, and forcing partners to meet their liabilities. But so far it has steadfastly refused to do anything of the sort, allowing firms to collapse and their partners to reappear elsewhere free of debt and without a stain on their characters.
However this may now change. Earlier this month Manches's creditors were told they would be repaid just ten pence in every pound that they were owed and the taxman, which is owed around £4m, is clearly less than delighted about that. The Lawyer reports that HMRC has now sent documents to an insolvency QC who is looking into obtaining a judicial review of the SRA's supine acceptance of the liquidation.
When Challinors went bust in August 2013 the SRA told RollOnFriday that it was "well aware of the negative perceptions around pre-pack administrations". But in the two years since it has done absolutely nothing about it. If this judicial review goes ahead the SRA may finally be forced to change its behaviour and law firm pre-packs may become a thing of the past.
Tip Off ROF
The firm's financial woes were widely known long before it went under. Although when RollOnFriday pressed the firm's Managing Partner about its troubles in July 2013, he said "we are seeing the benefit of a good upturn in our transactional business and our cost-cutting programme. We'll be announcing a number of lateral hires soon. Roll on Monday". Sadly he was talking through his arse - by October Manches had gone into administration. And Penningtons, which had previously considered merging with the firm, picked it up for a bargain £500,000. Its creditors were left with nothing.
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Manches' Managing Partner. How he might have looked. |
Manches is not alone in going through that sort of pre-pack redundancy. A number of firms have done so recently, royally shafting both their creditors and their own staff in the process. The SRA could prevent this by declaring such behaviour is conduct unbecoming of a solicitor, and forcing partners to meet their liabilities. But so far it has steadfastly refused to do anything of the sort, allowing firms to collapse and their partners to reappear elsewhere free of debt and without a stain on their characters.
However this may now change. Earlier this month Manches's creditors were told they would be repaid just ten pence in every pound that they were owed and the taxman, which is owed around £4m, is clearly less than delighted about that. The Lawyer reports that HMRC has now sent documents to an insolvency QC who is looking into obtaining a judicial review of the SRA's supine acceptance of the liquidation.
When Challinors went bust in August 2013 the SRA told RollOnFriday that it was "well aware of the negative perceptions around pre-pack administrations". But in the two years since it has done absolutely nothing about it. If this judicial review goes ahead the SRA may finally be forced to change its behaviour and law firm pre-packs may become a thing of the past.
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Law is a business - with business risks.
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