King & Wood Mallesons partners were called into a meeting today to discuss the next steps of the firm’s business strategy after halting its planned capital call, The Lawyer understands.
Partners were due to meet today to discuss the firm’s capital call, which aimed to inject an additional £14m into the business as part of its recapitalisation plans.
According to a source close to KWM four high-profile partners resigned before the meeting leaving the partnership unable to reach its cash call targets.
The four partners that have resigned are former managing partner Rob Day, head of investment Michael Halford, corporate finance partner Andrew Wingfield, and finance partner Jonathan Pittal.
A KWM spokesperson said: “King & Wood Mallesons can confirm the resignations of London partners Michael Halford, Jonathan Pittal and Andrew Wingfield. Rob Day has also indicated his intention to resign. These resignations do not impact our employees.
“In light of these resignations, the firm has paused its recapitalisation programme in EUME (having received commitments for the requested amount of capital) whilst it assesses the financial impact. We anticipate this process will be complete within four weeks.”
Halford was responsible for orchestrating the capital call, which was designed to help clear the firm’s borrowing held with Barclays bank.
Sources have claimed that KWM operated a £25m lending facility with Barclays.
In total it is understood that 54 partners exited the firm over the last 12 months. In comparison the firm has only attracted around 25 partners through lateral hires.
An ex-KWM partner said: “This news strikes a chord of fear in my heart. I hope that people aren’t going bankrupt, and I hope the firm isn’t going bankrupt – not just because I still like the firm but because they still owe me my unpaid profit share.”
According to partners close to the firm, KWM paid some profits distribution last week, but there are several tax bills outstanding for both current and ex-partners.
One source claimed that accountancy firm Grant Thornton and Alix Partners were present at the partnership meeting.
KWM has filed a High Court claim against former partner, Richard Lever, and his new firm Goodwin Procter. The Lawyer understands that the case relates to the US firm and Lever hiring a number of KWM lawyers in the UK and France.
Goodwin Procter hired a six-partner private equity team from KWM’s Paris office in April.
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