The report follows weeks of hearings, run by the Work and Pensions Committee and Business, Innovation and Skills committee, that saw partners from Linklaters, Olswang, Eversheds and Nabarro appear before a group of MPs in May.
'Detailed and rigorous'
Retail Acquisitions (RAL), which bought BHS for £1 in 2015, was a new client for Olswang at the time of the sale. The firm is noted for the ‘detailed and rigorous’ due diligence exercise it ran prior to the purchase of the retailer, which led MPs to conclude that it cannot ‘be blamed for the decision by RAL to go ahead with the purchase.’
Aware of weaknesses
However, Olswang was also found to be ‘increasingly aware of RAL’s manifold weaknesses as purchasers of BHS,’ but nonetheless content to take ‘generous fees’ and lend its name and reputation to the deal.
Relying on reputation
The report claims that Olswang and Linklaters, which advised seller Arcadia, relied ‘solely on each other’s presence’ to gloss over the risk of RAL boss and twice bankrupt Dominic Chappell as a buyer. It also alluded to the ‘cursory nature’ of the ‘know your client’ checks carried out by the firms.
Fees
Another issue was the large fees at stake, as advisers were ‘heavily incentivised to progress the deal’ because ‘RAL did not have resources to pay them otherwise.’ Linklaters confirmed it was paid £1.2m, while Olswang refused to provide details. However, Sir Philip Green later claimed that Olswang took £1.2m for the sale alone.
Sources: The Lawyer; Law Society Gazette
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