Mike Lynch's estate faces bankruptcy over £700m court order

Times

5 days ago

Mike Lynch's estate looks likely to be wiped out after a High Court judge ordered it to pay more than £700 million in damages to Hewlett Packard Enterprise in one of the UK's biggest corporate fraud cases.
Mr Justice Hildyard ruled in 2022 that Lynch had defrauded Hewlett Packard Enterprise (HPE) over the US tech giant's $11.7 billion (£8.7 billion) acquisition of his business software company, Autonomy, in 2011.
On Tuesday morning, almost a year since the technology entrepreneur's superyacht sank off the coast of Sicily while he was celebrating his acquittal in a US criminal trial, Hildyard announced he had awarded HPE damages totalling about £730 million.
The final figure could end up being substantially higher once interest is factored in after a final hearing scheduled for November. Lynch's family indicated they would consider appealing against the ruling.
Hildyard concluded that had Autonomy's accounts been properly stated, HP and Autonomy would have probably struck a deal that valued each Autonomy share at £23 rather than the £25.50 that it paid.
The Silicon Valley company had demanded $4 billion, far more than the $516 million that Lynch, who was 59 when he died last August, was estimated to have earned from the takeover. Hildyard said that HPE's claim 'was always substantially exaggerated'.
In a statement written by Lynch before his death, the tech tycoon said the ruling confirmed that HPE's original claim was 'not just a wild overstatement . . . but it was off the mark by 80 per cent'. He added: 'Today's judgment is a view that Autonomy's actual value was not even 10 per cent below the price HP paid. This result exposes HP's failure and makes clear that the immense damage to Autonomy was down to HP's own errors and actions.'
A spokesman for HPE said: 'We are pleased that this decision brings us a step closer to the resolution of this dispute. We look forward to the further hearing at which the final amount of HPE's damages will be determined.'
The damages will be paid for out of Lynch's estate. In the latest Sunday Times Rich List, the Lynch family's assets were valued at £473 million. Many assets are in the name of Angela Bacares, his widow, including Loudham Hall, their Suffolk estate, and shares in the cybersecurity business Lynch backed called Darktrace, which were sold for more than $300 million last year. If HP can prove these assets were really his, they could be targeted.
HPE bought Autonomy, a pioneer in 'big data' analytics founded by Lynch in 1996, in 2011. Within months of the deal's completion, HPE claimed that Lynch and his finance chief, Sushovan Hussain, had used accounting tricks to make Autonomy appear far bigger, and financially healthier, than it was.
The sale sparked more than a decade of costly litigation and investigations. In 2018, Hussain was convicted of fraud in the US and sentenced to five years in prison. He was released in January 2024 and settled with HPE in this case for an undisclosed sum earlier this year.
In 2021, the Financial Reporting Council, the UK's accounting watchdog, fined Deloitte £15 million for 'serious failures' over its audit of Autonomy's accounts.
After a long extradition battle, Lynch was sent to the US in 2023 to face a jury in California, but he was acquitted, along with Stephen Chamberlain, Autonomy's vice-president of finance, last June, shortly before the yacht accident in August.
According to an interim report from British marine investigators, at about 4am on August 19 last year while the Bayesian was anchored off the town of Porticello, the 56m (184ft) boat was violently knocked sideways by a sudden 80mph gust.
Water suddenly started cascading in and Bacares was pulled out of the vessel by a crew member. Others however, including Lynch and their 18-year-old daughter, Hannah, never made it out of the boat as it sank 45m to the sea bed. The conclusion of the UK legal proceedings has been in limbo since the maritime tragedy.
Although HPE wanted $4 billion, few thought it would get that much. Hildyard said in his original findings that the US company was unlikely to get the sum it was after, because HP may well have bought Autonomy, regardless of the fraud.