The potential to avoid court

The battle between IT giant Hewlett-Packard (HP) and the former directors of Autonomy, the company it bought in 2011 on the basis that the business was thriving, has taken another turn after HP has signed an agreement with Autonomy’s auditors to avoid a court case.  

The ‘standstill’ agreement is seen as a signal that HP will settle out of court with the accountants in a bid to avoid a mutually embarrassing clash in public. However, no such negotiation is likely with Autonomy’s founder, Michael Lynch and its former Chief Financial Officer, Sushovan Hussain, over their alleged fraudulent accounting.

HP bought Autonomy for $11.7bn (£7.2bn) but then was forced to write down the value of the firm by $8.8bn not much more than a year later, alongside allegations of ‘book cooking’ by Mike Lynch.  Dr Lynch denies any wrongdoing and blames the debacle on the shortcomings and instability of HP’s management team.  He has also engaged forensic accountants to prove that his figures were correct and claims that he has at least one piece of forensic evidence that will blow the allegations out of the water.

HP, on the other hand, have just filed a record-breaking £3.4bn damages claim in the High Court against Dr Lynch and Mr Hussain saying in US Courts recently that they both lied  “to an extraordinary extent” about the performance of Autonomy prior to the acquisition.  However the men have said they will countersue for more than £100m.

Both HP and the accountants that signed off Autonomy’s accounts have declined to comment on the standstill agreement or any settlement talks but the auditor pointed to a statement it made last year that said any possible claim made against them would be ‘utterly without merit’.

Author: Roger Issacs, 13 April 2015

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