Midland law firm Challinors has debts of more than £11 million, with dozens of local creditors.
The £11.4 million debt emerged after the firm’s partners unanimously agreed a notice of intention to appoint administrators.
Last week the firm’s senior partner Paul Griffiths stressed to the Post the firm had not gone into administration and was seeking to avoid doing so.
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The notice of intention move was designed to protect the interests of the firm for a 30-day period with a view to allowing its sale to go ahead.
Challinors, which has offices in Birmingham city centre, West Bromwich, Halesowen, Nottingham, Leicester, Loughborough and Wolverhampton, had appointed corporate recovery specialist KSA Group regarding its financial situation in May.
A Draft Statement of Affairs for Challinors Solicitors (Partnership) drawn up by KSA Group reveals a list of 250 creditors, both companies and individuals, stretching over more than 20 pages.
The bulk of the debt – £9.3 million – is owed to unsecured creditors with debts to contingent creditors and connected creditors standing at £1 million and £858,707 respectively. Preferential creditors are owed £209,272. The firm’s largest debt is to Allied Irish Bank, which is owed more than £4 million.
West Bromwich property investment services business Real Estate Investors is listed as both an unsecured and contingent creditor and owed several hundred thousand pounds in total.
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Among the larger sums owed are almost £500,000 to HM Revenue and Customs and £488,608 to South Tyneside Borough Council Pension Fund.
The firm owes almost £213,000 in rent to landlord Edmund Propco for its Birmingham city centre office at Edmund House on Newhall Street. Property company Jer Excelsis, which is owed £203,912, is also included on the contingent creditors’ list.
A number of councils on the unsecured creditors’ list include Sandwell Council (£67,824), Birmingham City Council (£6,652), Nottingham City Council (£10,816), Dudley Council (£12,033) and Wolverhampton City Council (£6,060).
West Bromwich-based property company Bond Wolfe is also owed £71,855.
Many law firms are also owed money, including solicitors Bray and Bray, Cartwright King and Breydons.
Last week the Post revealed two creditors who lent cash to the firm had started legal proceedings in a bid to retrieve £650,000 they are owed.
Dharmendar Khag, who lent the firm £400,000 and games designer Cosmic Concepts, which lent the firm £250,000, both served statutory demands on partners of Challinors.
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This week Mr Khag revealed he had called on the Solicitors Regulation Authority (SRA) to intervene in the firm, based on the fact that as a client of the firm he had not been urged to seek independent legal advice when making the loan.
Challinors has said it is working with the SRA, Allied Irish Bank and accountancy firm RSM Tenon in order to “keep disruption to a minimum” and protect the interests of clients and the public.
A statement issued by the firm on July 31 said: “Challinors has filed a notice of Intention to appoint administrators. This move has been made by the partners to prepare the way for a sale of the firm.
“Our intention is to safeguard clients’ interests, and to transfer the firm’s business as safely and efficiently as possible.
“We are working closely with specialists at RSM Tenon during this time to keep disruption to a minimum, together with our bank and the SRA to ensure the public and clients’ interests are protected.
“During this interim period, the business continues to trade normally and we believe the interests of our clients and staff have been safeguarded. As many of our clients as possible have been informed of the firm’s situation and we will keep them updated as there are developments to report.
“Until then, we will continue to deal with their matters to our usual high standards of legal service that they have come to expect from Challinors.”