The law firm at the heart of AIM-listed company MJ Hudson (MJH) is to be wound down after a deal was struck to sell the rest of the business to a financial services giant for £40m.
The decision to sell to Apex Group, which is part-owned by the Abu Dhabi sovereign wealth fund, meant the law firm was “no longer viable”.
MJ Hudson Ltd, the law firm arm, recorded a turnover of £7.7m and profit of £844,000 in the year to 30 June 2021, its last published accounts.
Solicitor Matthew Hudson launched MJ Hudson in 2010 as a niche City private equity and corporate law firm, becoming an alternative business structure in 2014.
From making up 65% of MJH’s turnover in 2019, the most recent figure put legal services at 27%.
In December, however, MJH’s shares were suspended after the company announced “significant” issues with the 2022 accounts that meant the results would be below previous guidance. Its chief finance officer was also suspended.
The shares had fallen 68% during 2022, to 13.13p, when they were suspended.
Mr Hudson resigned as chief executive in February but remains MJH’s largest shareholder at just under 25%.
Two days earlier, EY resigned as the company’s auditor, saying it had “lost trust and confidence in the company’s management and those charged with governance”, and in their ability to provide “accurate and reliable information for audit”.
MJH had 345 staff in eight offices in the UK, Europe and US, serving more than 1,000 clients globally, including 18 of the FTSE 100.
Having sold its UK fund management business last month to Khepri Ltd for £1m, the sale to Apex encompasses 250 staff working at MJH’s data and analytics (which includes the investment advisory business) and business outsourcing divisions.
These divisions made up most of the remaining business and MJH said yesterday that it intended to give notice to the Solicitors Regulation Authority “of the proposed closure of its legal business”.
A spokesman declined to say how many staff were affected but said: “The lawyers are spinning out to other laws firms. MJ Hudson’s law firm is being wound down and is no longer viable as a sole entity.”
Most of the proceeds will go to MJH’s senior lender, which is owed £34m.
“While there are a number of potential outcomes, given the level of creditors of the business expected at the point of final completion of the business outsourcing sale, it should be noted that it is highly unlikely that there will be a substantial, or any, amount available to shareholders following payment of all creditors and costs,” yesterday’s announcement said.
The company will seek shareholder approval of the arrangements – including cancelling its AIM listing – at a general meeting next month
They were told that, should approval not be given, there would be “a significant risk” of MJH’s creditors seeking “to put the whole or part of the group into an insolvency process, as the board does not believe that there is any alternative funding available or purchaser for the assets on equal or better terms”.