Slater and Gordon banks threaten to call in debts

Listed law firm Slater and Gordon has experienced a sharp decline in share value after releasing its half-year financial results on Monday.

Felicity Nelson • 02 March 2016 • NewLaw

The value of the firm’s shares have decreased more than 50 per cent since resuming trading on Monday, dropping from $0.83 per share on 23 February to $0.38 per share on Tuesday afternoon.

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On Monday, Slater and Gordon announced almost a $1 billion loss in the first half of FY2015-16.

A banking syndicate, lead by National Australia Bank and Westpac, have set a one-month deadline for the firm to plan changes to its operations to ensure the viability of the business.

Slater and Gordon has until 30 April to negotiate changes to the terms of its existing loans.

If the firm does not present an operating plan and restructuring proposal, the banks are able to demand a full debt repayment by 31 March 2017.

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At the close of 2015, Slater and Gordon's net debt position was at $741 million.

Managing director Andrew Grech offered to step down following the release of the financial results, but his resignation was rejected by the board of Slater and Gordon.

Class actions spurred on by crushing financial results

Maurice Blackburn has said it is “almost certain” that a class action on behalf of shareholders will proceed following the release of Slater and Gordon’s financial results.

Rival plaintiff firm Maurice Blackburn announced the launch of the class action in December last year.

Andrew Watson, national head of class actions at Maurice Blackburn, released a statement saying: “The sheer size and scale of this write down casts enormous doubt on the adequacy of disclosures made by Slater and Gordon in relation the true value of the Quindell assets.”

“[The] announcement of an $876 million impairment in goodwill and a near $1 billion loss strengthens the themes our class action investigation is pursuing,” he said.

Similarly, ACA Lawyers has finalised a funding agreement with two leading litigation funding groups to investigate bringing a shareholder class action against Slater and Gordon.

Bruce Clarke, principal at ACA Lawyers, said the potential class action had received a lot of interest from investors.

“There is real anger among Slater and Gordon investors, from small mum and dad investors to large institutional investors who are looking for some way to recover the millions of dollars that have been lost over the past 10 months,” he said.

V Friday, 27 May 2016

Spare a thought for the many staff who have been pushed out, let go or made redundant. There are plenty of them I have seen it myself. It is definitely one sinking ship! 

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matthew Monday, 07 March 2016

Maurice Blackburn's obvious motivation here is not the well being of the "mum and dad" shareholder as they suggest but rather it is to rub out the opposition. A class action will eradicate any possibility of share holders recouping their losses. I would be very wary of joining a class action against a company I wanted a return from! And the Banks of course would be rubbing their hands together over a loan repayment deal that would deliver them considerable profit and I imagine less enthusiastic about winding SGH up which would cause them considerable loss.

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Damien Monday, 07 March 2016

John Henry, this is policy genius!

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Brian Friday, 04 March 2016

Please don't blame the banks. There are many ways for law firms to fudge their figures and lie to banks. Never closing a file and writing off the (left over) work in progress would be one. Makes the bottom line look really good on paper. Banks calculate your worth from your work in progress. It's a concept that is difficult for auditors to understand let alone the banks. It's called creative accounting folks and S&G have clearly been engaging in it for some time. A doctor's creed is "do no harm", a lawyer's is "client first". A public company's is "shareholders". Are we seeing the disconnect here between "client first" and "shareholders". It was always going to end in tears. No need to engage in conspiracy theories about Unions and the like. S&G went out into the market with a growth strategy built on acquisition with no interest in organic growth. Sorry for the shareholders and the idiot brokers who advised them. Oh, and the poor blighters who work for them, of course.

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John henry Friday, 04 March 2016

the levy could be paid by installments over say 5 years in special needs cases. the levy would also be tax deductable. obviously lawyers at community legal centers and not for profits would be exempted. 

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Calm Friday, 04 March 2016

Turn it up they have nothing to answer for.... Are you kidding, ofcourse the advice provided by bankers and consultants should be looked at, they after all would have professional indemnity for a reason. As for the lawyers looking at the cases, what relevance is that, the merits of the cases in the UK contributed to very little if any Of the losses, it was the statutory changes and poor accounting practices that played a much larger part.Ultimately the decision to purchase was that of SGH but like everything else the Devils in the detail. I would love to see the advice & internal commentary from Pitcher Partners and the banks when this was going on. 

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Expatjohnno Thursday, 03 March 2016

You appear to know little about Quindell or what happened throughout 2014 and 2015 regarding its share price and its accounting treatment for valuing Work In Progress in personal injury cases. Slaters viewed Quindell as a worthwhile asset purchase. They repeatedly said that they had carried out full due diligence on what they were buying and were satisfied it was a good buy. This was despite a large consensus to the contrary, particularly in the UK business press.

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Throw me under a bus Thursday, 03 March 2016

Rather than play the game of blame shifting, perhaps we should look to those that made the decision to buy Quindell, namely Andrew Grech and his team of lackey directors. By their own admission, Slaters send 70 of their own lawyers to undertake extensive due diligence. The banks and other experts have nothing to answer for.

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Where were the experts? Thursday, 03 March 2016

How about an article naming who the banks were that advised Slaters to buy the Quindell operation? Who were the advisors/consultants who should have known that the market doesn't care about the specifics, if it gets wind of the smallest problems with a company or the economy it operates in, the market will react badly and like a herd? The bankers and the advisors should have been across Quindell's problems as well as the upcoming changes in relation to insurance law in England. So who exactly were the bankers and advisors? I've read plenty of articles naming successful lawyers and their achievements, so it's time to name those who it seems didn't have a clue what they were doing. Maybe they could at least refund the fees given their advice was next to useless.

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WTF Wednesday, 02 March 2016

You can't be serious? That is legitimately the worst thing I have ever heard in relation to trying to resolve this situation. For some young lawyers that is over a third of their starting salary. No other solicitor in Victoria is responsible, let alone liable to pay a levy that stabilises a debt, which has been accrued by bad corporate management and transactions that have not paid off as they initially thought they would.

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