Written by Peter CarterSeptember 20, 2016
Slater and Gordon will take legal action against the UK company it purchased the disastrous Quindell professional services business from after the acquisition nearly sent the law firm to the wall last year.
If the claim is successful, it will help Slater and Gordon claw back £50 million ($AU87 million) of the purchase price for the bad deal.
Quindell had been placed into escrow in case the deal went south.
On Monday, Slater and Gordon announced that it would bring claims against Quindell, now known as Watchstone
Group. However, they did not detail where their claims would be made.
Now with the Serious Fraud Office in the UK honing in, Watchstone could be in strife. The organisation is conducting an investigation into the group’s accounting treatments of its work in progress.
In the deal that is now known as one of the five worst acquisitions of all time, Slater and Gordon purchased Quindell for $1.3 billion in 2015.
Shortly after the acquisition was sealed, Quindell was subjected to an SFO investigation in Britain. Following this they were forced to restate its accounts for its 2013 year.
The restated accounts led to Quindell booking a £64 million loss for the year. An extremely different picture to the previously reported £107 million profit.
Quindell after the sale of its professional services arm to Slater & Gordon, also restated its revenues to £247 million from £380 million previously.
Former head of Quindell, Rob Terry, told the UK’sTelegraph newspaper that Slater and Gordon “got a bargain” buying the business and he disputed the need for any restatement of accounts.
Slater and Gordon booked a $1 billion impairment when it wrote down the majority of the value of its UK business following the troubles with Quindell’s accounting and regulatory changes in Britain.
The writedown and the restated accounts led to Slater and Gordon entering into emergency discussions with its bankers to refinance its debt.
Slater and Gordon’s horror year was capped off with a board exodus and the law firm posting a loss of more than $1 billion for the year to June 30 in August.