The High Court has ruled that the estate of the late Mike Lynch, along with his business partner, owes Hewlett Packard Enterprise (HPE) over £700 million. This ruling follows a long, complicated legal struggle related to the sale of UK based software company Autonomy. Lynch’s trade in this case was selling Autonomy to HPE for a staggering $11.1 billion in 2011.
Instead, Mike Lynch had a stormy legal history. Tragically, he lost his life last year when his yacht sank off the coast of Sicily. In 2023—now over a decade after the alleged violations—he was finally extradited to the U.S. He was pursued on criminal charges for purportedly fraudulently inflating Autonomy’s valuation. But he was acquitted on these charges in 2024.
Lynch himself allegedly made around £500 million of personal profit from the sale of Autonomy. HPE also alleged that Lynch and his onetime second-in-command, Hussain, knowingly misrepresented the company’s valuation. This misrepresentation resulted in serious financial damages to HPE, forcing them to write down the value of Autonomy by $8.8 billion for what they characterized as “serious accounting improprieties.”
In an earlier 2022 ruling, Mr. Justice Hildyard ruled that HPE had already “substantially succeeded” on its claim against Lynch and Hussain. He noted the company would probably get “substantially less” than the $5 billion it first asked for. In April 2018, Hussain was convicted in the U.S. on multiple fraud-related counts. He was subsequently sentenced to five years in prison.
The judge expressed his “sorrow at this devastating turn of events” and extended his “sympathy and deepest condolences” to Lynch’s family, acknowledging Lynch’s contributions despite ruling against him.
Lynch’s prepared statement addressing the court’s decision emphasized that HPE had “botched the purchase of Autonomy and destroyed the company.” He argued that the evidence presented against him included hearsay from U.S. witnesses whom they could not cross-examine, stating, “When in the US criminal trial we were able to cross-examine the relevant witnesses, a very different story emerged. Why is the English legal system so trusting?”
HPE responded positively to the ruling, expressing satisfaction that it “brings us a step closer to the resolution of this dispute.” A spokesperson said the department looks forward to the hearing, which is now set for November. This hearing will determine the amount of damages to be paid.
“acquired Autonomy for $11.6bn and today’s judgment is a view that Autonomy’s actual value was not even 10% below the price [HPE] paid.” – Mike Lynch’s prepared statement
In short, both sides are preparing for the next round in this perpetual legal drama. This ruling foreshadows a continued important trend in corporate law and accountability, particularly with respect to mega mergers and acquisitions of high-risk technology.