Olswang and Latham & Watkins protected as Berwin Leighton gets client claim release ;SCHEME OF ARRANGEMENT: High Courts decision breaks new ground in case brought by City firm ;City firm Berwin Leighton has acted in a groundbreaking scheme of arrangement for a client which will also protect London-based media law firm Olswang and US practice Latham & Watkins from any legal actions arising out of the insolvency of telecoms company Ionica.

;Berwin Leighton was acting for Micadent, Ionicas parent company.

;Under the scheme of arrangement pursuant to s.425 of the Companies Act 1985, Ionicas creditors are bound to distribution arrangements which are different to those which would apply in a winding-up.

And, in an unprecedented move, it obliges the creditors to release their claims not only against Ionica but also various third parties including Micadent, formerly Ionica Group, as well as certain former directors and officers of and advisers to Micadent and Ionica.

;Normally, a scheme of arrangement is simply between the company and its creditors, and does not involve third parties.

;The advisers are Olswang, Latham & Watkins, accountants Arthur Andersen and Pricewaterhouse-Coopers, and banks Chase Manhattan, Warburg Dillon Read and BT Alex Brown.

;Marc Palley, the banking and capital markets partner at Berwin Leighton who advised Micadent along with corporate finance partner Antony Grossman, said the creditors had been threatening to sue everyone under the sun.

His view was that the claims were entirely without merit.

No proceedings were ever begun.

;Olswang had no comment as it had not been a party to the scheme.

Lathams had not commented at the time of going to press.

;The decision to insist on the third-party release for the advisers related to letters of engagement with Micadent as well as Ionica which predated Ionicas collapse.

Mr Palley said they were concerned that if a flurry of legal actions were begun, the advisers would join Micadent as a defendant.

;There was no good reason why the court shouldnt agree to this, he said.

Sir Thomas Stockdale QC acted for Micadent.

The High Court approved the scheme last week.

;Mr Palley said that research had found no precedent.

The government of Abu Dhabi insisted on a similar release over the collapse of BCCI, but that was in Insolvency Act proceedings, rather than s.425 proceedings.

It was a one-off specific to the circumstances, he added.

;US firm Cadwalader Wickersham & Taft advised the joint administrators of Ionica.

;Neil Rose