The estate of Mike Lynch, who died a year ago when his superyacht sank off the coast of Sicily, and his business partner owe Hewlett-Packard more than £700m, a court has ruled.
The US technology company has been seeking damages of up to $4.55bn (£3.37bn) from the estate of the late tycoon, once hailed as the UK’s answer to Microsoft founder Bill Gates, over its disastrous takeover of his British software company Autonomy.
Lynch’s estate has been estimated to be worth about £500m and paying its share of the £700m damages could leave it bankrupt.
He and six others, including his 18-year-old daughter Hannah, died last August on a trip with friends and family celebrating his acquittal on US fraud charges relating to HP’s $11bn takeover of Autonomy in 2011.
The 56-metre (184ft) yacht, Bayesian, was anchored near the town of Porticello, Sicily, in calm waters when a freak storm hit and an 80mph gust took just 15 seconds to tip the yacht sideways into the water a little after 4am. Less than 20 minutes later it had sunk.
The other fatalities were the vessel’s cook, Recaldo “Rick” Thomas, Lynch’s lawyer Chris Morvillo and his wife, Neda, and the chair of Morgan Stanley International bank, Jonathan Bloomer, and his wife, Judy.
Nine crew members and six guests – including Lynch’s wife Angela Bacares, whose company owns the Bayesian – were rescued.
HP won a six-year UK civil fraud case against Lynch and his former finance director Sushovan Hussain in 2022, with Mr Justice Hildyard ruling that the US company had been induced into overpaying for Autonomy.
On Tuesday, Hildyard issued a ruling at the high court in London on the damages owed to HP from the case. He determined that HP sustained losses of more than £646m in relation to the difference between what it paid for the business and what it would have paid if its true financial position had been known.
“Autonomy’s true financial position and performance had not been properly and accurately disclosed, and had it been so, HP would not have proceeded with its acquisition of Autonomy at the bid price,” said Hildyard.
Hildyard also said HP was entitled to another £51.7m in relation to “personal claims for deceit and/or misrepresentation against Dr Lynch and Mr Hussain”.
However, he said he considered that HP’s original $4.55bn claim “was always exaggerated, and I have concluded that there is more than a grain of truth in Dr Lynch’s submission”.
Hildyard addressed Lynch’s death in his ruling, saying the tragedy had caused him to delay his original plan to share a draft of the judgment to the involved parties last September.
“No words from me will be of any comfort to his wife and family,” he said in his ruling on Tuesday. “But I wish to express my sorrow at this devastating turn of events, and my sympathy and deepest condolences, having come to know and admire Dr Lynch (notwithstanding my findings against him) over the course of a very long trial.”
Lynch had intended to appeal against the high court’s 2022 ruling, a process that was on hold pending Tuesday’s decision on damages.
A spokesperson for the Lynch family said they would consider an appeal against the damages ruling, adding that it reflected “that HP’s original $5bn damages claim was not just a wild overstatement – misleading shareholders – but it was off the mark by 80%”.
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In 2019, Hussain was sentenced to jail for five years after a US jury found him guilty of fraud over the Autonomy sale. He was also ordered to pay financial penalties of about $10m.
He started his prison sentence in 2020 but was released early and returned to the UK last year.
Last July, Hussain was excluded from the Institute of Chartered Accountants in England and Wales until 2038, after a decision by the Financial Reporting Council.
Last month, the Bayesian was raised from the seabed as part of a criminal investigation by Italian authorities that may not conclude until 2027.
British maritime investigators also intend to examine the boat as part of a separate investigation into the safety of its design that will feed into inquests in the UK into the deaths of the British nationals onboard.
As the sole shareholder of Revtom, the corporate entity that owned the Bayesian, Bacares has been dragged into a multimillion-pound compensation fight between the families of other victims and the insurance company that covered the yacht.
Lawyers representing the family of Thomas, whose body was the first to be recovered by divers, have said they will soon press for compensation from Bacares, the crew and Camper & Nicholsons, the management company.
British Marine, a subsidiary of the insurance company QBE, covered the Bayesian for more than $150m in liabilities and has instructed its own US law firm.
