Slaters serves claim on Quindell

Troubled law firm Slater & Gordon has served its claim against Watchstone Group, the rebranded Quindell.

Slater & Gordon managing partner Andrew Grech.

Troubled law firm Slater & Gordon has served its claim against Watchstone Group, the rebranded insurance group formerly known as Quindell, in a bid to claw back funds put aside during the $1.3 billion acquisition of the troubled professional services division.

Slaters is eyeing up to £50 million ($87m) that was put aside in escrow as insurance against any souring of the 2015 deal, when the law firm paid £640m for the problematic division.

A spokeswoman yesterday said the claim was filed and served in the High Court of England and Wales. “As the claim is now before the court, it is not appropriate to comment any further,” she said.

Slaters raised almost $900m from investors to fund the Quindell purchase, which has now become the focus of class actions from rival Maurice Blackburn and potentially ACA Lawyers.

Slaters said its claim value ­exceeds Watchstone’s net assets and moneys held in escrow by several hundred million pounds, and has accused Watchstone and its then senior management of fraud.

Watchstone is still the subject of probes by the Serious Fraud Office, which is looking into its past accounting practices. However, the company still holds the windfall from the £640m purchase price paid by Slaters for the professional services arm.

Five months after Slaters bought the unit, Quindell became the subject of a probe by Britain’s Serious Fraud Office. Restated accounts from Quindell cut the previous year’s profits to show it was a loss-making venture when it had previously said it was profitable, and led to Slaters overhauling its own work-in-progress accounting.

Slater reported a half-year loss of $425m in February and managing director Andrew Grech said the British turnaround was proceeding slower than expected. Slater has booked writedowns of more than $1 billion since the Quindell takeover.

Meanwhile, a deal between the federal government and Slater & Gordon yesterday, in which the firm represented about 1900 asylum-seekers currently or formerly held on Manus Island, will see a $70m-plus costs settlement.

Slater shares rose 1c on the news to 10c — a 13 per cent increase on the day. That is down from the peak of just under $8 in mid-2015.

In March, Slater & Gordon secured a debt restructuring, with debt sold at 20c in the dollar. The 80 per cent haircut for former debt holders Westpac, NAB, Barclays and Royal Bank of Scotland left a group of local and international hedge funds with control of the $730m debt pile.