The protracted demise of Halliwells was set to enter its final chapter on Tuesday as administrators awaited creditor approval for proposals that would see the defunct firm formally wound up.

As the Gazette went to press, it remained unclear how much secured creditor Royal Bank of Scotland would recoup in respect of outstanding loans to Halliwells totalling £17.7m. A report published last week by joint administrators from BDO said taxpayer-controlled RBS was not expected to receive the full amount.

The report revealed that Halliwells collapsed owing £14.1m to unsecured creditors, including £2.1m owed to barristers and professional experts, including firms of solicitors. Seven QCs are among more than 20 counsel owed five-figure sums.

HM Revenue & Customs is owed £4.3m, the highest amount. However, the list includes a wine supplier, a London sandwich bar, and Manchester United and Sheffield United football clubs, among dozens of trading entities both large and small.

Unsecured creditors are not expected to receive a dividend but some fortunate barristers could recoup some or all of the amounts owed to them depending on when payments were processed.

Manchester-headquartered Halliwells, one of the UK’s biggest regional law firms, collapsed earlier this year following a steep decline in profitability resulting from the recession. Net profit peaked at £8.5m in 2006/07 before the downturn took hold. The firm recorded a loss of £1.8m in 2008/09.

It was the policy of the de facto partners, members of a limited liability partnership, to draw remuneration equivalent to the entirety of projected profits, the administrators noted. As they were LLP members, they are not personally liable for the firm’s outstanding debts.

BDO has also drawn attention to the legacy of a multi-million-pound reverse premium paid to Halliwells a few years ago when it agreed to move into headquarters in Spinningfields, dubbed Manchester’s ‘Canary Wharf.’ About 75% of that premium, understood to exceed £20m, was distributed to equity partners, most of whom are understood to have left the firm before it fell into administration. The firm was subsequently run on borrowed money, with RBS taking a security over its assets.

Halliwells LLP went under with work in progress of £16.3m and debtors totalling £12.1m. The bulk of the firm was carved up by four rivals – Hill Dickinson, Kennedys, Barlow Lyde & Gilbert and HBJ Gateley Wareing – to which most LLP members and staff transferred. The quartet are expected to pay more than £8m in total for the assets they acquired, partly depending on the extent to which outstanding client bills are honoured.

The report shows that the administration has so far cost £1.1m, with BDO partners billing at up to £645 an hour, and principals and directors at the accountancy firm at £400-£500 an hour.