HP stuck ‘on the horns of a dilemma’ as it mulls pursuing Mike Lynch’s family for $4 billion Autonomy claim
Hewlett Packard risks causing a PR storm for very little in return if it goes ahead with plans to win money back for its disastrous Autonomy deal.
Jaded tech group Hewlett Packard has kept a low profile in the wake of Mike Lynch’s death last week, seeking to distance itself from the court battle that arguably led to the tech mogul’s untimely demise without making a clean break.
However, a public feud is expected to whir on in the background as HP seeks billions of dollars in compensation from Lynch’s estate. This much was clear in its statement last week regarding both Lynch’s death and the outcome of a successful civil suit.
“We do not think it appropriate to comment on legal matters in these tragic circumstances. We’re saddened by this tragic event and our thoughts are with the families and friends of all the victims,” a spokesperson told several outlets.
HPE, as it is now called, hasn’t ruled out pursuing a payout over its botched Autonomy deal.
The Silicon Valley–based company was attempting to retrieve $4 billion in civil damages from Lynch as he celebrated his recent acquittal on fraud charges in the Mediterranean Sea last week.
Lynch died alongside six other people, including his 18-year-old daughter Hannah Lynch, Morgan Stanley International chair Jonathan Bloomer, and Lynch’s key defense attorney, the Clifford Chance lawyer Chris Morvillo, when the Bayesian yacht he boarded sank in a storm.
An expert in legal disputes warns HP is now “on the horns of a dilemma” over whether to enforce a judgment on Lynch’s estate, which would likely include his mourning widow and legal owner of the Bayesian, Angela Bacares.
“On a technical level, they will need the court’s permission to do so, but that is unlikely to be refused,” Robin Henry, partner and head of dispute resolution services at Collyer Bristow, told Fortune.
“The real issue for HP is whether they are willing to face criticism that they are now intent on pursuing a grieving family following Lynch’s death in such tragic circumstances.
“HP may ultimately feel they have no choice but to continue seeking recovery of such a significant sum, but they are likely to be keen to limit the continued proceedings to an argument over the amount of their claims.”
HP’s pursuit
HP launched a yearslong legal battle against Lynch following its $11.7 billion acquisition of Autonomy in 2011.
A year after the deal, the group wrote down the value of its purchase by $8.8 billion, accusing Lynch and his allies of inflating the value of the firm through illegal accounting practices.
Lynch was cleared of fraud in a criminal trial in the U.S. in June after lawyers, including Morvillo, successfully argued he wasn’t involved in any malpractice at the company. Autonomy’s former CFO, Sushovan Hussain, recently completed a five-year prison sentence after being found guilty of 16 counts of fraud in 2018.
HP says it hasn’t ruled out pursuing the $4 billion in damages it claims it is owed after winning a civil trial in the U.K., in which a judge ruled that the Autonomy founder was likely aware of fraudulent practices in his accounting division.
The judge said that any damages paid to HP would be considerably less than the multibillion-dollar payout the group demands. Lynch, in his final months, spoke of plans to clear his name in the U.K.
What is HP owed?
A U.K. judge is expected to determine compensation for HP later this year after finding in favor of HP in 2022.
There isn’t a confirmed sum on Mike Lynch’s net worth at the time of his death, though he was unlikely to have held the funds demanded by HP.
Lynch is reported to have banked £500 million (nearly $800 million at the time) from Autonomy’s sale in 2011.
He launched the VC fund Invoke Capital a year later, where he backed startups including Darktrace and Luminance.
The late tech mogul’s estate held a 3% share in Darktrace at the time of his death, equivalent to around $159 million. The British cybersecurity firm, which has deep ties to Autonomy through its leadership team and early funding, is the subject of a $5.3 billion acquisition by U.S. private equity giant Thoma Bravo.
Oliver Embley, a partner at Wedlake Bell, points out that the executors of Lynch’s estate face their own dilemma. They will be unable to administer his estate until the outcome of any litigation or appeals, extending his family’s wait for inheritance.
PR nightmare
If HP chooses to pursue damages, it will have to change the name of the defendant from Lynch to the executors of his estate, which will likely Bacares.
However, several people sympathetic to the late tech mogul and his grieving widow warn it could be a PR disaster for the company.
David Davis, a Conservative Party MP and the U.K.’s former Brexit Secretary who was friends with Lynch, urged HP to drop the claim, saying it was unlikely to reach the $4 billion mark it seeks.
“I would think the wise thing for Hewlett-Packard to do in their own interest is to drop the case because they are not going to make a great deal of money out of it, but they are going to make themselves very unpopular with the ordinary members of the public, picking on a bereaved family,” Davis told the Daily Mail.
A representative for HP didn’t immediately respond to a request for comment.
