A statement released today by KWM read: ‘Having completed its assessment, a revised plan was submitted to the EUME partnership under which the same amount of new partner capital was required, but with the financial support of the verein member firms. Regrettably, insufficient value of new capital was committed.’ The bailout offered by King & Wood Malleson’s China-based partnership had offered to help pay down the £30m worth of debt currently facing the firm’s Europe arm on the provision that partners injected £14m worth of new capital and that 60 per cent of partners agreed to a 12-month lock-in.
Possible merger hinted
KWM Europe is now in a tough spot without financial backing from other arms of the verein. A statement from the firm announced the collapse of the bail-out plan said: ‘The EUME partnership Board and management are considering a range of strategic options, including mergers, in conjunction with the firm’s bankers and financial advisers.’ The statement said that KWM will continue to ‘operate on a business per usual approach’ while a plan is developed, with a more specific statement to come in due course.
More defections ahead?
Confirmation of the failed recapitalisation comes alongside news that recently resigned former KWM head of investment funds Michael Halford has resurfaced at Goodwin Procter. His exit from KWM last month together with three other KWM high-earners was one of the reasons why the European partnership was forced to halt its original recapitalisation effort. A spokesperson for Goodwin said that ‘certain other KWM partners’ have also been made offers by the firm, though the offers remain subject to a vote by Goodwin’s partnership.
Sources: Legal Business; Legal Week; The Lawyer
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