Slater & Gordon has avoided going out of business following shareholder approval for a bailout which sees hedge fund Anchorage Capital Group take a 95 per cent ownership stake in the company. In a debt-for-equity deal, 70 per cent of shareholders voted to approve a plan which reduces their stake to five per cent of the share registry. The company said it risked insolvency if the recapitalisation was not agreed. The firm's UK operation will be formally separated from the deal, announced in September in a statement to the Australian Stock Exchange following news that revenue had dropped by 31 per cent for the UK arm.The company has also said it will take up to 18 months to hive off the UK unit and warned it may be responsible if the UK business defaulted on any contracts in the meantime.

Difficulties

The company experienced difficulties following its acquisition of Quindell, now renamed Watchstone Group - and the subject of a £600m claim by Slaters which Watchstone is contesting. The Melbourne-based company said the aim was to reduce Slater & Gordon’s total secured debt, enable it to continue to trade and prevent a breach of banking agreements. The AGM meeting was 'fiery' with Ancorage Capital making clear its representatives would be working to protect Anchorage's interests.