The demise of King & Wood Mallesons’ European arm was fuelled by partner departures and a failure to reach agreements, an administrators’ report has claimed.
According to an interim report for creditors, published today by Andrew Hosking and Sean Bucknall of Quantuma, administration ‘was the only resort left’ for the firm.
The report also reveals that the administrators, who took over earlier this month, had been in contact with the Solicitors Regulation Authority to ‘reduce the risks’ of an intervention in order to benefit creditors.
When contacted by the Gazette, Quantuma said it was unable to comment on how much money was owed to creditors. It also declined to comment on reports that the firm was in debt to the tune of around £30m at the time of its collapse.
According to the report, on 30 April 2016, KWM had 163 partners and more than 900 staff, generating revenues of approximately £177m to that date.
The firm, which started life as SJ Berwin before merging with China and Australia-focused King & Wood Mallesons, finally slipped into administration on 17 January after months of turmoil during which several partners left and trainees’ contracts were cancelled. The firm has now ceased to practice and has been renamed QSP Residual Recoveries LLP.
The report also includes a run-down of sales completed since Quantuma took over.
- Six partners to City firm Greenberg Traurig
- Eight partners to international firm DLA Piper
- 11 partners to KWM’s China arm
- 12 partners to City firm Reed Smith
- The sale of King & Wood Mallesons in Spain to the partners
Before administration was confirmed seven partners, along with a team of associates and five trainees, joined Goodwin Proctor. Magic circle firms including Allen & Overy and Freshfields Bruckhaus Derringer have also offered trainees a position.
Hosking said: ‘Since we were formally engaged 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.’
He added that it was too early to present a full picture of why the firm collapsed but that it was clear that, despite restructuring attempts, it had proved impossible to reach agreements on funding and the way forward with partners.