The estate of Mike Lynch has been granted permission to challenge a court order requiring it to pay Hewlett Packard (HP) £920 million over the sale of Autonomy, reviving a legal battle that has already run for more than a decade and threatens to wipe out the late technology entrepreneur’s fortune.
Lady Justice Asplin last week granted permission to appeal on four of the 14 grounds put forward by lawyers for the estate, ruling that the other ten had “no real prospect of success”.
The appeal will examine whether Lynch was aware of improper accounting at Autonomy, how the damages judgment against his estate was calculated, and the foreign exchange rates used when quantifying the award. The narrow grounds suggest the appeal is unlikely to exonerate Lynch, but it could reduce the amount his estate has to pay. It also means the ten year dispute between HP and Lynch, who died when his Bayesian superyacht sank two years ago, is likely to continue into next year.
A decade of litigation
HP sued Lynch and Sushovan Hussain, his former chief financial officer, in 2015 over the sale of Autonomy. The US technology group claimed that fraudulent accounting by Lynch and other executives had inflated the value of the FTSE 100 software company before HP bought it for $11 billion (£8 billion) in 2011.
The pair were found liable in the High Court in 2022, and in March this year Lynch’s estate was ordered to pay HP £920 million. That sum would bankrupt the estate, which has been estimated to be worth around £500 million. HP had earlier pared its damages claim back to $1.8 billion, a fraction of its original demands.
A spokesman for Lynch’s family welcomed the decision to grant the appeal, saying it could “deliver justice” for his heirs. “We welcome the Court of Appeal’s decision to grant permission to appeal. The questions to be heard confirm what Lynch always maintained: that HP’s claim was wildly exaggerated and HP’s losses stemmed overwhelmingly from its own conduct after the acquisition,” they said.
Lynch, who was cleared of criminal charges in a US trial over the sale shortly before his death, had always maintained that HP mismanaged Autonomy after buying it, and had vowed to challenge the civil fraud ruling.
Widow could be pursued
HP’s lawyers have raised the prospect that, if the company cannot recover the full damages from the estate, it could pursue Lynch’s widow, Angela Bacares. HP has also indicated that it could investigate Lynch’s previous dealings with family members as it seeks to recover the full sum.
The family spokesman said: “Although the trial judge awarded HP a fraction of what it sought (barely 10pc of the price HP paid for Autonomy), significant questions surround even that amount as reflected in the appeal. We support the estate’s continued attention to the case, which, if successful, will deliver justice for Lynch’s heirs rather than reward HP’s own misconduct.”
A spokesman for HPE, one of the two successor companies to HP, said: “The Court of Appeal’s denial of permission to appeal on virtually all substantive issues confirms that Hewlett-Packard was a victim of Autonomy management’s fraudulent behaviour. We look forward to concluding this dispute once the Court of Appeal addresses the few remaining questions, largely relating to the damages calculations.”
Hussain, who served a US prison sentence for fraud relating to the deal, separately paid £77 million to settle with the company. The judgment on how the damages were quantified is among the matters the appeal court will now revisit.
Lynch, once dubbed “Britain’s Bill Gates”, died when the Bayesian sank off the coast of Sicily two years ago. His teenage daughter Hannah and five other people also lost their lives. Bacares, who survived the sinking, is being sued separately by the Italian yacht builder that constructed the Bayesian.
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