The Federal Court gave the final sign-off for Slater and Gordon’s recapitalisation plan at a hearing on Thursday.
This entailed the approval of two schemes of arrangement: one between the firm and its senior lenders, which will deliver them 95 per cent of Slaters’ equity, and another with the firm’s shareholders to settle the Hall proceeding and any other shareholder claims.
Slater and Gordon shares went into a trading halt prior to the announcement.
The firm said in an ASX update that it expected to lodge a copy of the court orders approving the schemes with ASIC on Friday, after which it would proceed to implement the schemes.
Slaters previously held meetings to secure approval for the schemes from its senior lenders and shareholders, both of which were successful.
The recapitalisation includes the separation of Slaters’ Australian and UK businesses, with the UK arm to be wholly owned by its senior lenders. The firm said this will allow it to focus on revitalising its Australian business.
At the firm’s AGM on 6 December, shareholders elected Australian CEO Hayden Stephens an executive director, effective immediately.
John Skippen was re-elected as a non-executive director and will remain chairman of the board until the implementation of the recapitalisation, which is currently scheduled for 22 December.
He impressed on shareholders that the recapitalisation was “essential for Slater and Gordon to avoid insolvency”.
“The recapitalisation provides the only opportunity to secure the future of the firm and its workforce, and also provides the potential for some value recovery for shareholders and other stakeholders as Slater and Gordon pursues its strategic plan in Australia,” according to the chairman’s address.
Merrick Howes, Nils Stoesser and James MacKenzie were also elected as non-executive directors, effective from the date of the implementation of the recapitalisation plan.
Former managing director Andrew Grech pulled up stumps, retiring from his role as a non-executive director. Mr Skippen thanked Mr Grech on behalf of the board for his long service to the company, and congratulated the new appointees.
Mr Skippen also addressed questions over Mr Grech’s remuneration.
“In relation to Andrew Grech’s remuneration, contrary to some media reports, his termination does not include any additional ex-gratia payments,” he said.
“He will be paid only contractual entitlements including notice and unpaid leave once his resignation as a non-executive director becomes effective at the close of this meeting.
“Andrew received an allowance to cover the additional costs incurred for the actual additional living expenses he incurred while in the UK for nearly two years. This was a temporary allowance to compensate him for the additional actual expenses he incurred and did not represent an ongoing increase to remuneration.”
Fairfax reported in September that Mr Grech would continue to receive fees equivalent to his base salary as managing director at $560,384 until he left the firm.
Slater and Gordon’s troubles have fuelled the debate over publicly listed law firms over the last few years.