Metamorph crisis: Winding-up orders, staff unpaid and directors quitting

The troubled Metamorph Group of legal practices continues to fight for its life this week as firms were rocked by resignations, winding-up orders and office closures.

The Gazette understands that the group board emailed staff on Friday afternoon to advise that offices in Chester, Sale and Shrewsbury are to close and that certain client accounts have been frozen following action from banker HSBC.

The email, seen by the Gazette, states that the bank responded following the placing of MLL Limited into compulsory liquidation at the end of last month. The client accounts of BPL Solicitors Limited and Beaumont ABS Limited are also frozen.

Some staff have not been paid since October and have been informed their salaries will be paid only once funds are released to Bedfordshire firm Knowles Benning, the most recently acquired Metamorph entity which appears to have absorbed several practices in the group. The email states that more than £150,000 remains in the MLL office accounts, the first priority of which, after liquidators’ fees, will be to pay outstanding salaries andc pensions.

Staff are expected to continue to work and bill as normal despite not being paid this month, the email states. It is further understood that salary increases promised last month are yet to be implemented. One employee told the Gazette that most of the group’s support staff have left and that departments such as HR, finance, payroll and IT are working with threadbare numbers.

Knowles Benning is acting as successor practice to a number of firms in the process of being wound down. Manchester firm BPL Solicitors is transferring its client work to Knowles Benning and clients are being contacted to ask for instructions about who they would like to work with in future. Other firms such as Midlands firm Verisona Law and north west practice Linder Myers are registered with Knowles Benning.

But the management of Knowles Benning appears to be uncertain, even as it is earmarked as the successor to so many other businesses. According to Companies House, head of wills, trusts and probate Antonio Fallanca, head of crime Catherine Smith and head of property Stephen Atkins all ceased to be members of the firm on Friday. Tony Stockdale, Metamorph's executive chairman, had his membership terminated the day before.

One of the best-known Metamorph brands, Beaumont ABS, is now in liquidation having been subject to a winding-up petition from estate agency Connells Limited. The liquidators’ statement of affairs, published last week, outlinsd that Beaumont ABS owes a total of £2.3m, including almost £36,000 to Connells and £182,000 and £96,000 respectively to fellow estate agents Spicerhaart and Sequence. It also owes more than £39,000 in coronavirus support payments. Unsecured creditors are likely to receive nothing once the total assets have been realised.

MLL Limited, which owned several of the firms in the group, was also subject to a winding-up order on 30 November.

Very little information has come out of Metamorph since the group's financial difficulties began earlier this year. Metamorph, which employed more than 650 people at its peak, has not said anything publicly since acquiring Knowles Benning in July. The parent company, along with several others in the group, has yet to file accounts for 2021/22 which were due by 30 June. The previous group marketing manager left in October and her nominated replacement, Paul Rowson, completed a joint management buy-out of the law firm network Quality Solicitors earlier this month and became a director of that business. 

The question now is whether the Solicitors Regulation Authority is minded to take any action.  An SRA spokesperson said: ‘All firms have an obligation to close in an orderly way as laid out in our guidance. If we become aware that a firm is not adhering to our rules, then we can step in.’

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