HP sued Brit tech baron Mike Lynch for around 5billion following its purchase of Autonomy after claims he boosted revenues and ‘committed a deliberate fraud over a sustained period of time’
The estate of British tech mogul Mike Lynch faces a bill of more than £1.35 billion to Hewlett-Packard (HP) following its takeover of software firm Autonomy, the High Court has heard.
A portion of the sum is expected to be settled by Mr Lynch’s estate, following the entrepreneur’s death at age 59 last August. Mr Lynch perished alongside his 18-year-old daughter Hannah and five others when his superyacht, the Bayesian, went down off Sicily’s coast.
HP, operating as Hewlett-Packard Enterprise (HPE), launched legal action against Mr Lynch seeking around £3.79 billion after its £8.2 billion purchase of the Cambridge-based company in 2011.
During a nine-month trial in 2019, the corporation alleged that Mr Lynch had artificially boosted Autonomy’s revenues and “committed a deliberate fraud over a sustained period of time’, which it claimed forced it to announce a £6.5 billion write-down of the firm’s value just over a year following the takeover.
In a 2022 judgment, Mr Justice Hildyard found that the American company had “substantially succeeded” in its case, though it would likely receive “substantially less” than the damages it had sought.
He determined that Autonomy, established by Mr Lynch, had failed to accurately represent its financial standing during the sale, but even with proper disclosure, HPE would still have proceeded with the acquisition, albeit at a lower price.
Earlier this year, the same judge determined that HPE had sustained losses of approximately £700 million through the Autonomy purchase.
A London hearing that commenced on Tuesday is now tackling issues including currency conversion, interest calculations and whether Mr Lynch’s estate can challenge both the 2022 and 2025 court decisions.
In written arguments presented to the hearing, Patrick Goodall KC, representing HPE, declared that Mr Lynch’s estate owes $1,786,668,553 (£1.35 billion), incorporating approximately $761 million (£578 million) in interest charges.
Mr Goodall argued that Mr Lynch had “not only perpetrated an enormous fraud, but lied about it at every stage”.
He went on to reveal that the claimants had splashed out nearly £150 million on the legal fight, and were demanding almost £113 million of their costs from Mr Lynch’s estate.
Mr Goodall also contended that Mr Lynch’s estate should be barred from appealing either the 2022 or 2025 judgements, arguing that whilst the estate “does not seek to appeal any of the findings of actual fraud”, it “pursues an appeal aimed at escaping the consequences of that fraud”.
Richard Hill KC, in written arguments for Mr Lynch’s estate, maintained that the $761 million (£578 million) in interest demanded by the claimants was an “excessive sum… based on a flawed analysis” and that the “legally and economically rational approach would provide for a materially lower figure”. The barrister went on to say that the claimants’ assertion that “they were the victors in this litigation” was “overly simplistic”.
He further argued that due to HPE’s “exaggeration” of their claim and “the way in which they pursued their case in these proceedings”, the amount Mr Lynch’s estate should pay in costs ought to be reduced.
Mr Hill also advocated for Mr Lynch’s estate to be granted permission to appeal against the two previous rulings, alleging that the judge “erred in law” and there was a “compelling reason for allowing the appeal to be heard”.
A representative for the Lynch family commented: “Today’s hearing addresses technical matters that change nothing about the underlying substance of the case.
“The core facts remain that HP’s claim was fundamentally flawed and a wild overstatement.”
The hearing before Mr Justice Hildyard is scheduled to wrap up on Friday, with a written judgment anticipated at a later date.