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Magic Circle scrambles as UK construction giant Carillion falls into liquidation
A heavyweight line-up of Slaughter and May, Freshfields Bruckhaus Deringer, Dentons, Clifford Chance (CC) and Linklaters have mobilised as construction giant Carillion files for liquidation in one of the largest UK insolvencies for years.
Dentons’ restructuring partners Nigel Barnett and Neil Griffiths are advising the liquidator, the Official Receiver, which the government will be providing with funding required to continue to carry out the company’s public services.
Freshfields has also landed a substantive role on the liquidation, led by restructuring partner Adam Gallagher. Other senior lawyers acting include Freshfields partners Ken Baird, Ryan Beckwith, Craig Montgomery and Neil Golding. Dentons and Freshfields are also advising PwC as the court-approved manager of the liquidation.
The collapse came after talks between the Wolverhampton-headquartered company, its creditors and the government failed to reach a deal on its £1.5bn liabilities, including £900m in debt. An application to the High Court for a compulsory liquidation was made on Monday (15 January) morning.
Slaughters partners William Underhill and Ian Johnson had acted for the UK’s second largest developer on the talks, along with restructuring partner Tom Vickers and corporate partner Sally Wokes.
CC’s restructuring partner David Towers has advised Carillion’s main banks, Barclays, The Royal Bank of Scotland and HSBC.
Linklaters also represented the main lenders on the talks, along with Akin Gump Strauss Hauer & Feld and Willkie Farr & Gallagher. Akin is acting for private placement noteholders, fielding a team under London restructuring partner Barry Russell.
Last summer Carillion announced more than £800m of write-downs and appointed a team from EY to identify cost savings, led by North West senior partner Bob Ward.
Carillion’s liquidation raises questions over the future of the company’s 43,000 staff – 20,000 of them in the UK – as well as the projects the company is developing, including the HS2 high-speed railway linking London, Birmingham, the East Midlands, Leeds and Manchester. The company also manages 50,000 homes for the Ministry of Defence and around 900 school buildings. The company has a turnover of around £5bn.
The Pension Protection Fund (PPF) will be managing Carillion’s pension funds, which have a deficit of £587m. The company’s UK pension schemes have around 28,000 members, making it the largest fund the agency has ever taken on. Specialist law firm Sackers has been advising Carillion’s pension trustees along with PwC and Freshfields.
The liquidation will be a hugely complex process, potentially impacting hundreds of subcontractors and involving issues of state ownership and liability. The collapse comes amid what has been relatively slim pickings for restructuring advisers, with years of ultra-low interest rates resulting in a dearth of insolvency work.
marco.cillario@legalbusiness.co.uk
For more on the restructuring and insolvency market see our recent analysis, ‘Waiting for Carney’ (£)
Ex-Slaughters corporate veteran Randell appointed chair of FCA
After an eminent career in later years dominated by picking up the pieces of the post-Lehman world, former Slaughter and May corporate veteran Charles Randell has been appointed chair of the Financial Conduct Authority (FCA).
Randell, who is currently an external member of the Prudential Regulation Committee of the Bank of England, will take up the role on 1 April for a five-year term, overseeing the City’s primary regulatory agency. He replaces outgoing chair John Griffith-Jones, a veteran accountant best known for running KPMG’s UK business. The role, which is contracted for three days a week, is one of the most prominent positions in public life to have been handed to a former City lawyer.
The move follows the 2015 appointment of Herbert Smith Freehills London litigation head Tim Parkes as chair of the FCA’s regulatory decisions committee.
FCA chief executive Andrew Bailey commented: ‘[Randell’s] experience of regulation, both during the financial crisis and more recently as a member of the Prudential Regulation Committee, mean that he has a strong understanding of the challenges that the FCA faces.’
Randell, who is also a non-executive board member for the Department of Business, Energy and Industrial Strategy, worked at the Magic Circle law firm between 1980 and 2013. Becoming a partner in 1989, he acted on a string of high-profile corporate mandates. His most celebrated role in private practice was leading the legal team for HM Treasury on the rescue of Northern Rock, the collapse of the Icelandic banks and the state support package for Royal Bank of Scotland, HBOS and Lloyds. For years a key operator for Slaughters, Randell generated roughly £32.9m of fees through his engagement with HM Treasury. One of Randell’s senior colleagues on the bailout work, corporate partner Nilufer von Bismarck, was this week awarded an OBE in the New Year’s honours list.
In April 2017, Norton Rose Fulbright and Squire Patton Boggs won roles on the FCA’s panel of skilled advisers. The roster is set to remain until 2021.
‘Totally out of the blue’: Slaughters’ von Bismarck awarded New Year OBE
Slaughter and May corporate luminary Nilufer von Bismarck has been awarded an OBE in the Queen’s New Year’s honours list for services to financial services.
Von Bismarck (pictured), who is a corporate partner and head of the magic circle firm’s financial institutions group and equity capital markets, told Legal Business that the gong came ‘totally out of the blue’.
‘This is really a tribute to the firm’s financial services practice” von Bismarck said, noting that Slaughter and May has an excellent and longstanding financial services practice, advising both the government and the private sector.
Von Bismarck joined the firm in 1990 and was made up to partner in 1994. Her recent work highlights include advising the state-owned UK Green Investment Bank on its £2.3bn sale to Macquarie Group, which closed last August, as well as advising Treasury on the Williams & Glyn alternative remedies package to resolve RBS’s state aid commitment. That deal received European Commission approval last July.
The firm is also acting for Barclays on ring-fencing its retail operations from its investment bank, a transaction which is likely to be ongoing until April 2018.
Other notable honours for City Law included an MBE for Sacha Harber-Kelly, who is soon to join Gibson Dunn & Crutcher as a partner in the US firm’s London disputes and white-collar crime practice. He previously worked at the Serious Fraud Office (SFO) for 10 years, most recently as a prosecutor in the anti-corruption and bribery division.
Harber-Kelly was the SFO’s representative in the government working group that designed the deferred prosecution agreement (DPA) system and acted on its £497m DPA with Rolls-Royce – the largest single investigation carried out by the watchdog. He receive the MBE for services to combatting fraud, bribery and corruption.
nathalie.tidman@legalease.co.uk
For a personal look at Nilufer von Bismarck’s career and life outside work, read Life During Law
Slaughters unveils five-figure bonus awards as junior lawyers’ pay edges higher
In the latest sign of pressure to secure the best young talent, Slaughter and May has confirmed it is to pay five-figure bonuses to many associates amid modest salary rises for junior lawyers.
Slaughters today (13 December) announced that associates achieving ‘a good or exceptional level of performance’ will receive a bonus ranging between 9% and 16% of salary, broadly matching the rates the City leader paid out last year.
This bonus applies to all the lawyers in the firm’s PQE band, with NQ to six months’ PQE lawyers in line for a 9% bonus. The bonus increases to 12% for one to two years’ PQE, 14% for two-and-a-half to four years’ PQE, and 16% for four-and-a-half to six years’ PQE.
From January, Slaughters will also increase the salaries of its trainees to reflect ‘current market rates’. First year trainees will see salaries rise from £43,000 to £44,000 with second year trainees rising from £48,000 to £49,000. Newly-qualified (NQ) lawyers receive a £2,000 hike from £78,000 to £80,000, with six-month PQE salaries rising from £82,500 to £84,000. The firm’s one-year PQE salaries are to be increased from £87,000 to £88,000.
Despite the rises for its juniors, there was less cause for festive cheer among mid-level associates – the effective engine room of large law firms – who saw rates held at current levels of £98,500 and £108,000 respectively for two and three years’ PQE.
The pay shake-up comes after Slaughters substantially boosted associate base salaries by 10% on 1 January 2017 with NQ pay increasing by 9%. The Magic Circle firm opted in June to hold associate pay bands for the coming year.
A number of Slaughters’ City peers have already this year pushed through rises to associate pay, reflecting intense demand for the best associates in the Square Mile. Most recently Allen & Overy announced a series of rises to its underlying pay scale, hiking NQ rates from £78,500 to £81,000.
Whether the latest round of rises at London firms will be enough to stop the drain of associates to the City arms of US advisers will be open to debate when many leading US outfits are paying well over £100,000 for entry-level lawyers.
For more analysis on the City pay rates click here (£)
‘Unprecedented in scale’: City bluebloods advise as Tata separates UK pension scheme
Travers Smith, Slaughter and May and Hogan Lovells all advised as Tata Steel last month signed a long-awaited agreement to separate its business from the £15bn British Steel Pension Scheme (BSPS), in what is the largest pensions scheme restructuring ever in the UK.
As a result of the separation, achieved through a regulated apportionment arrangement, Tata will pay £550m to BSPS, which will also be given a 33% equity stake in the steel company. With the support of The Pensions Regulator and the Pension Protection Fund (PPF), a new BSPS will be created after an assessment period.
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Magic Circle prove mettle as Tata and ThyssenKrupp agree €15bn steel JV
Following last month’s separation of Tata Steel’s business from the British Steel Pension Scheme (BSPS), Linklaters and Slaughter and May have been drafted in to advise on its much-anticipated €15bn joint venture with Germany’s ThyssenKrupp.
The 50:50 project received the green light as the firms signed a memorandum of understanding today (20 September) to launch an Amsterdam-headquartered joint venture consisting of a 48,000-strong workforce spread across 34 locations. A final agreement is expected to be signed in 2018.
Slaughters is acting for longstanding client Tata Steel on the deal, alongside best friend firms Hengeler Mueller and De Brauw Blackstone Westbroek.
Slaughters’ team is led by M&A partners Robin Ogle and Padraig Cronin, alongside finance partner Andrew McClean. German-based Hengeler Mueller’s team comprises M&A partners Christof Jackle and Karsten Schmidt-Hern while M&A partners Mark Rebergen and Anja Mutsaers make up the team from Netherlands firm De Brauw.
Linklaters is advising ThyssenKrupp, with a team headed by Düsseldorf M&A partners Kristina Klaassen-Kaiser and Ralph Wollburg.
Ogle told Legal Business the deal was particularly interesting given its ‘cross-border nature’ and highlighted the successful co-operation between Slaughters and its best friend firms on the continent.
Despite the two steel manufacturers being in negotiations since last year, Tata’s separation from the BSPS was seen as a major obstacle to any combination. However, the separation completed in August through a regulated apportionment agreement and by paying £550m to BSPS.
Slaughter and May was on hand to advise on the restructuring through pensions and employment partner Charles Cameron. Travers Smith represented the BSPS trustee, with a team led by pensions partners Paul Stannard, Dan Naylor and Susie Daykin, while Hogan Lovells represented the Pension Protection Fund.
‘Knowhow and track record’: Magic Circle dominates new panel as seven firms dropped in government legal services revamp
Magic Circle firms constitute four of the nine advisers appointed to the government’s new finance and complex legal services panel with seven law firms left out after a reboot of its legal services framework continues.
Freshfields Bruckhaus Deringer, Linklaters, Slaughter and May and Clifford Chance are part of the new panel advising on matters including finance, refinancing, capital markets, corporate transactions, projects and regulation.
Dentons, Ashurst, Berwin Leighton Paisner, Hogan Lovells and Simmons & Simmons will also sit on the Crown Commercial Services’ advisory group, which will replace the finance and regulation panel when this expires in January next year.
Addleshaw Goddard, Allen & Overy, Burges Salmon, Mills & Reeve, Nabarro (now CMS Cameron McKenna Nabarro Olswang), Pinsent Masons and Squire Sanders (now Squire Patton Boggs) were on the previous panel but have not been named this time around.
The contract runs for two years from 21 August, with an option to extend for up to 24 further months.
Dentons will offer an integrated service in Scotland through its recently announced merger with Maclay Murray & Spens, while sub-contractor Brodies will support Simmons on Scottish law. Another sub-contractor, Bates Wells Braithwaite, will give Simmons additional public and administrative law support.
Christopher McGee-Osborne, who led Dentons’ panel bid, said the appointment of the firm, which has advised the government for more than 30 years, demonstrated it has ‘the public sector knowhow and track record to deliver the best advice and service to central government’.
Helen Hancock, a finance partner at Simmons & Simmons said: ‘As a firm we have had a strong focus on government and public sector work for many years. We were on the previous panel, and this new panel arrangement is an opportunity for us to build on our track record in what we see as a focus for us going forward.’
Other recently announced panels replacing parts of the government’s legal services framework include rosters for general legal services and rail legal services.
In March 2016, the government announced an initiative to cut down the number of go-to-firms it uses for external advice by almost 40%. The reduction formed part of a bid to improve legal services delivery across the public sector.
‘Unprecedented in scale’: Travers, Slaughters and Hogan Lovells advise as Tata Steel separates UK pension scheme
Travers Smith, Slaughter and May and Hogan Lovells have all advised as Tata Steel today signed a long-awaited agreement to separate its business from the £15bn British Steel Pension Scheme (BSPS), in what is the largest pensions scheme restructuring ever in the UK.
As a result of the separation, achieved through a regulated apportionment arrangement (RAA), Tata Steel will pay £550m to BSPS, which will also be given a 33% equity stake in the steel company. With the support of the Pensions Regulator and the Pension Protection Fund (PPF), a new BSPS will be created after an assessment period.
Slaughter and May advised long-standing client Tata Steel on the restructuring, with pensions and employment partners Charles Cameron and Phil Linnard, restructuring partner Ian Johnson, finance partner Andrew McClean and M&A partner Padraig Cronin comprising the team. PwC also represented Tata Steel.
The BSPS trustee has been a Travers Smith client for ten years, and the firm represented it on the restructuring with a team that included pensions partners Paul Stannard, Dan Naylor and Susie Daykin, finance partners Jeremy Walsh and Ed Smith, corporate partner Adrian West, tax partner Richard Stratton and derivatives partner Jonathan Gilmour.
The separation of the BSPS had been seen as a barrier to a potential merger of Tata Steel with Germany’s ThyssenKrupp, but the separation may now accelerate merger discussions.
In a statement, Tata Steel’s group executive director Koushik Chatterjee said: ‘Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA presents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business.’
The PPF, which was represented by Hogan Lovells, said in a statement: ‘Members of the British Steel Pension Scheme will have seen a lot of speculation about the future of their pensions, so we want to reassure them the PPF is there to protect them throughout this process.’
Slaughter’s Cameron added: ‘This restructuring is unusual in a number of ways, and unprecedented in its scale. It is by far the largest pension scheme restructuring carried out in the UK.’
In April 2016, Forsters lined up opposite Slaughter and May on Tata Steel’s deal to sell its European long-products business to UK investment house Greybull Capital.
Slaughter and May leads as Freshfields and Paul Weiss take key roles on £900m Michael Kors buyout of Jimmy Choo
Slaughter and May, Freshfields Bruckhaus Deringer, Paul, Weiss, Rifkind, Wharton & Garrison and Skadden, Arps, Slate, Meagher & Flom are all advising on Michael Kors’ £900m offer for luxury British fashion company Jimmy Choo.
Under the agreement, the shoemaker would become a wholly-owned subsidiary of Michael Kors. Its shareholders will receive £2.3 in cash for each of their Jimmy Choo shares, 36p above the £1.68 share price the day before Jimmy Choo’s parent JAB Luxury announced it would launch a formal sale process in April.
Slaughter and May acted for Michael Kors in the UK, while Paul Weiss advised the company on US corporate and financing aspects. The Slaughters team is comprised of London-based corporate and commercial partner Jeffrey Twentyman, competition partner Lisa Wright and tax partner Sara Luder.
Paul Weiss team’s team was led by New York-based corporate partners Justin Hamill and Tom de la Bastide, alongside co-head of North America capital markets and securities John Kennedy.
Freshfields acted for Jimmy Choo via corporate partner Christopher Mort, with support from corporate partner Alison Smith, employment partner Nick Squire and antitrust partner Alex Potter.
Skadden represented Goldman Sachs and JP Morgan as financial advisers. The Skadden team included M&A New York-based partner Paul Schnell and Washington-based partner Jeremy London, as well as London-based corporate partner Scott Hopkins and banking partner Clive Wells.
The boards of directors of both companies have approved the transaction but has yet to be voted in by Jimmy Choo’s shareholders.
The deal will be subject to regulatory approvals in the EU, US and Russia and is expected to complete in the fourth quarter of 2017.
When Jimmy Choo floated on the London Stock Exchange in 2014, the issuer, private investment firm JAB Holdings owned by the German billionaire Reimann family, instructed Freshfields with Mort as leading partner. Hogan Lovells acted for Jimmy Choo at the time on its long-term incentive plans, while Linklaters advised on refinancing matters.
The Michael Kors offer is part of a string of foreign takeovers generating work in the city this year as foreign buyers take advantage of the drop in the value of the pound since Britain voted to leave the EU.