Slater & Gordon has revealed its intention to sue Watchstone Group, the remnants of the United Kingdom company Quindell, which it paid $1.3 billion to acquire its professional services division.
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Now, according to a Financial Times report, S&G has issued a statement outlining that it “intends to bring claims against Watchstone arising from SGH UK’s purchase of Quindell’s Professional Services Division”.
If the claim can not be resolved before the end of November then the £50m will remain in escrow until the claim has been resolved.
Should claims under the agreement fail to be resolved ahead of the November 29 escrow release date, or indeed not meet the outlined threshold requirements, “including a merits assessment by an independent barrister, part or the whole of that amount may be retained in the escrow account subject to resolution of that claim”.
Meanwhile, Quindell, which renamed itself Watchstone Group, became somewhat of a cash-box holding the proceeds of the £640 million purchase price paid by Slater & Gordon.
Since completing the deal, Quindell was investigated by the UK’s Serious Fraud Office over its accounting practices, before it changed its name and celebrated the timing of the deal as the United Kingdom government revealed plans to clamp down on personal injury claims.
Having received notice from SGH of a purported claim on Monday, Watchstone said it “does not believe that there are grounds for a claim to be brought and will defend it robustly”.
Slater and Gordon’s horror year was capped off with a board exodus and the law firm posting a loss of more than $1 billion for the year to June 30 in August.
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For Slater & Gordon investors there’s some potential upside if it is able to save £50 million in payments over the Quindell deal, although it will need a strong case of misrepresentation over warranties given by Quindell or similar given Slater & Gordon itself was responsible for the due diligence.
