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“Harris Lipman couldn’t have done any more – they got us into the best position possible in the circumstances”

Mr B and Mr P, who were both partners in a solicitors firm, had to call on the services of Harris Lipman when another partner perpetrated mortgage fraud estimated at up to £60million, including raising more than one mortgage on the same piece of land.

While the other partners were not involved in the crime (and were completely exonerated by the Law Society), they were unable to escape the negative effects on the practice. The firm, which was established in 1946 and, prior to the fraud, had had as many as 12 partners, was eventually left with three remaining partners attempting to pick up the pieces.

While they had believed that their Professional Indemnity insurance would protect them from the consequences of the other partner’s actions, their insurance company judged that several deals involved in the fraud were one case, sending them over the insurance’s limit. This in turn put the practice into administration, with the risk that the remaining partners would be ‘jointly and severally’ liable for its losses.

One of the three partners took the decision to go bankrupt, while Harris Lipman’s Freddy Khalastchi and Michael Levene assisted the remaining two to go through the process of reaching agreements with their creditors.

Mr B said: “There were many claims involved in the fraud case and we would normally be insured for each one, but the insurance company said because each claim was very similar in nature, and were all down to the same parties, they were going to treat them all as one, which meant our maximum insurance would not cover us.

“When it became clear the practice would not be able to continue, we brought in Harris Lipman on the recommendation of a friend of ours. They advised us that an IVA would be the best option, rather than bankruptcy, which our creditors were persuaded to accept.”

While the closure of the firm and entering into an IVA was a distressing experience for Mr B and Mr P, they felt Harris Lipman did as much as possible to help them through the process and give them a future in the legal sector which they would not have had if they had gone bankrupt.

Mr B added: “Harris Lipman couldn’t have done any more – they got us into the best position possible in the circumstances, and it was a better situation that anyone else had been able to achieve. We were advised our only option was to go bankrupt, which one of the partners did.

“As a result of Harris Lipman’s efforts, we’re both still working, which we couldn’t do before, and once the IVA comes to an end, we will be free to do what we want, including becoming partners in a practice again, if that is what we decide to do.”

Solicitors firm
Partners’ IVA

 

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