'The bank has put us in an impossible situation' - managing partner's email to KWM staff

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Earlier today, KWM Europe managing partner Tim Bednall sent an all-staff email explaining that the firm could no longer pay staff salaries this month as promised, because its primary lender, Barclays, had withdrawn funding.

Here is the email in full:

“You will have heard from your Employee Representatives on Thursday that salaries were due to be paid on Friday last or yesterday.  I am very sorry to have to tell you that this payment will not be paid, and no further salary payments will be made (with the exceptions set out below).

“Barclays, our bankers, indicated to me on Thursday evening that they were not willing to approve the salary payments due to you.  I made a proposal to the bank on Friday to counter this, asking that essential payments including salaries be paid.  This proposal was rejected on Friday.  I made a further proposal to ensure salary payments could be made on Sunday and this, also, was rejected.  A final proposal was submitted to the bank last night and, with deepest regret, this too was rejected this morning.

“I appreciate that the position the bank has taken puts you all in a difficult position and I am very sorry that there is nothing further that I can do to cause the bank to change its mind.  Although Barclays stands to lose a substantial amount of money it will have benefited by around £5m in the last week in terms of business receipts and anticipated proceeds of the sale of parts of the business.

“We have, today, filed a second Notice of Intention to Appoint Administrators at the Court with an alternative administrator named on the filing – Andrew Hosking of Quantuma – after Alix Partners declined to consent to be named as administrators because of concerns about funding.  We will now be seeking to accelerate the appointment of Andrew Hosking as administrator.

“In order to undertake the administration we will need to maintain our essential services and I will be contacting a significant number of employees with an offer of continuing employment as soon as possible, certainly within the next 24 hours.  Please continue with business as usual, as challenging as that is, until you receive further instructions.  Non-legal staff who are not required for the administration need not attend the office from tomorrow.

“Individuals who are required as part of the administration will, of course, be paid.  If you are a fee-earner and you are transferring to another firm, you will be aware of your obligations to continue to work on the files that you are looking after until your transfer. Please can I also remind you of your professional obligations to ensure that an orderly transfer of files occurs.

“This is a difficult message to write, no doubt as difficult as it is to read.  I have the deepest regret for all that has happened in recent weeks, but no more so than this.  The bank has put us in an impossible situation and, despite the immense challenges, we must do everything we can to ensure our clients’ interests are protected.”