Documents lodged with Companies House show that KWM’s European and Middle Eastern arms signed a debenture with Barclays on 27 July that gives the bank new security over the firm’s revenue stream. ‘By executing this debenture you charge to us with full title guarantee with the payment or discharge of all secured sums,’ reads the document, noting the inclusion of ‘all [KWM] securities … all your goodwill and uncalled share capital for the time being … all your intellectual property … all trade debts now and in the future owing to you.’ The pledge also contains provisions which will require KWM to obtain written approval from Barclays before it can ‘sell, assign, lease, license, sub-license or grant any interest in’ the firm’s intellectual property rights, meaning that the firm will need the bank’s consent to open new offices or reconfigure existing leases. Should KWM fail to meet its obligations to Barclays as outlined in the debenture, the bank has included a provision which will allow it to appoint an administrator.
Unprecedented in scale
The debenture awards security in favour of Barclays after KWM extended its borrowings with the lender from £20m to £25m earlier this year. The firm has stayed tight-lipped as to whether the debenture replaces existing borrowings or comes as new debt: ‘We have no further comment to make on what is the confidential business of the firm,’ reads a statement from KWM. However, with the debenture to stay in place for all European and Middle East revenues until all sums have been repaid – regardless of potential improvements in the firm’s financial performance – the strictness of the provisions may be unprecedented for a major City firm. ‘This really restricts what KWM can do without reference to the bank. It’s belt and braces stuff. I’ve never seen this at a law firm,’ one City partner told Legal Business.
Sources: Legal Business; Legal Week
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