Stalemate in Mike Lynch estate's HP damages case resolved

Times

19-05-2025

A legal stalemate over how much money Mike Lynch's estate may have to pay Hewlett-Packard, in one of the UK's biggest corporate fraud cases, has been resolved.
Lynch, founder of the software company Autonomy, was killed in a yacht accident in August, along with his daughter and five others while celebrating his acquittal in a US criminal trial.
At the time of Lynch's death, $4 billion in potential damages was looming over him from a 2022 British ruling, when Mr Justice Hildyard found that he and his finance chief, Sushovan Hussain, had manipulated Autonomy's finances to make the company seem more valuable before selling it to HP for $11 billion in 2011.
The conclusion of these legal proceedings has been in limbo since the maritime tragedy. Hildyard has been unable to issue a final ruling on how much Lynch's estate will have to pay because his executors would not take up their roles while the case was live and there remains the possibility it would be bankrupted by the proceedings.
HP's lawyers, Travers Smith, described it as a 'circularity problem': no one could represent the estate until solvency is known, but solvency could not be judged until the court rules on damages.
Hildyard has now approved the appointment of a neutral third party to temporarily represent the estate in the litigation. Jeremy Sandelson is a retired lawyer and former partner at Clifford Chance, a firm which acted for Lynch.
The appointment ensures the case can move forward while the estate's future is still uncertain and clears the way for the long-awaited judgment on financial penalties.
The judge ruled that Sandelson can begin his duties immediately without waiting for a formal probate grant, which typically takes months. He will be able to hire lawyers and pay reasonable legal costs using estate funds, but cannot settle debts from before Lynch's death unless the court gives further permission.
While HP wants $4 billion, this is far from a given. Hildyard said in his original findings that the US tech giant was unlikely to get the sum it was after, because HP may well have bought Autonomy, regardless of the fraud.
• How the Bayesian yacht tragedy unfolded, slowly then suddenly
In a further twist, Hussain settled with HP in this case for an undisclosed sum at the end of last week. Details have not been made public but it is understood there was no admission of liability.
In the latest Sunday Times Rich List the Lynch family's assets were valued at £473 million. Many assets are in his widow's name, such as Loudham Hall, their Suffolk estate, and most of a 7 per cent stake in Darktrace. The cybersecurity business that Lynch backed in 2013 was sold for $5.3 billion to Thoma Bravo, a US private equity business last year, providing the family with more than $300 million and Hussain $100 million. Lynch personally made $500 million from the sale of Autonomy to HP.
The sale of Autonomy to HP sparked more than a decade of painful, 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.
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 Californian jury but was acquitted along with Stephen Chamberlain, Autonomy's vice-president of finance, last June, shortly before the yacht accident in August.
This latest judgment from Hildyard also gives a glimpse of the eye-watering sums of the lawsuits. Lynch still owes £367,578 to Clifford Chance UK and $599,235 to its US office, a hangover from the US legal proceedings.