Mike Lynch’s estate is now effectively bankrupt after being told to pay Hewlett Packard £700million in a court case over the late British tycoon’s former company.
A judge in London said HP was owed the money from the estate of Dr Lynch and his former business partner over its acquisition of their software firm Autonomy.
HP is trying to recoup its losses from Dr Lynch – who died a year ago when his luxury yacht sank off Sicily – and Autonomy’s ex-chief financial officer Sushovan Hussain.
The High Court ruling comes after seven people died in the Bayesian disaster on August 19 last year including billionaire Dr Lynch, 59, and his daughter Hannah, 18.
It means Dr Lynch would be expected to pass nothing to his widow Angela Bacares – who survived the disaster – and surviving daughter Esme, unless there is an appeal.
The California-based technology giant sued Dr Lynch and Mr Hussain, accusing them of masterminding an elaborate fraud to inflate the value of Autonomy, which HP bought for £8billion in 2011 before the deal spectacularly unravelled.
HP wrote down Autonomy’s value by £6.5billion within a year and brought a £4billion lawsuit against Dr Lynch and Mr Hussain, with a judge ruling in HP’s favour in 2022.
Dr Lynch, once hailed as Britain’s answer to Bill Gates, had always maintained his innocence and blamed HP for failing to integrate Autonomy into the company.
Mike Lynch with his wife Angela Bacares, who managed to escape from the disaster off Sicily
Hannah Lynch with her father Mike Lynch. Both died in the sinking of his superyacht last month
Mike Lynch’s £6million Georgian manor house in Suffolk, in 69 acres of grounds and woodland
He was acquitted of criminal charges over the deal in the US and had intended to appeal the High Court’s 2022 ruling, a process which had been on hold pending today’s decision on damages.
Judge Robert Hildyard ruled HP sustained losses of over £646million in relation to the difference between what HP paid for Autonomy and what HP would have paid ‘had Autonomy’s true financial position been correctly presented’.
Judge Hilyard also said HP was entitled to another £52million in relation to ‘personal claims for deceit and/or misrepresentation against Dr Lynch and Mr Hussain’, plus another £35million in relation to losses suffered by group companies.
Some of the money is due to be paid by Mr Hussain, who was also sued by HPE.
He was convicted in April 2018 in the US of wire fraud and other crimes related to Autonomy’s sale, and was sentenced to five years in prison.
While he has since settled HPE’s claim, he could still be required to pay damages.
HP said at a hearing last year that it was seeking up to £3billion.
A further hearing to deal with matters including interest, currency conversion and whether Dr Lynch’s estate can appeal against the decision is set to be held in November.
Handing down his ruling, Mr Justice Hildyard expressed his ‘great sympathy’ for Dr Lynch’s family, calling his death a ‘tragedy’.
The Bayesian at Termini Imerese in Palermo in June where Italian prosecutors are investigating
The mast of tech tycoon Mike Lynch’s superyacht the Bayesian at Termini Imerese in Palermo
The Bayesian at Termini Imerese, where Italian prosecutors investigating the sinking are based
He said: ‘It is a source of anxiety to me that I have to deliver a judgment that will inevitably cause further stress on those involved.’
In the 197-page ruling, he said he considered that HP’s claim ‘was always substantially exaggerated’ and that the £4billion ($5billion) figure claimed ‘was not based on detailed analysis’.
Following the ruling in 2022, Dr Lynch, who was also the founding investor of cybersecurity giant Darktrace, was extradited to the US in May 2023 to face criminal charges after his removal was approved by the then-Home Secretary Priti Patel.
He was cleared of accusations that he orchestrated a fraud and conspiracy over Autonomy’s sale in the US in June 2024, and was celebrating the acquittal on his yacht at the time of his death.
In a statement written before his death, issued posthumously by his representatives today, Dr Lynch said: ‘Today’s High Court ruling reflects that HP’s original $5billion damages claim was not just a wild overstatement – misleading shareholders – but it was off the mark by 80 per cent.
‘HP acquired Autonomy for $11.6billion and today’s judgment is a view that Autonomy’s actual value was not even 10 per cent below the price HP paid.
‘This result exposes HP’s failure and makes clear that the immense damage to Autonomy was down to HP’s own errors and actions. An appeal process will be considered later this year.
The tech tycoon’s superyacht the Bayesian is moved after being lifted to the surface in June
‘The English civil case included hearsay evidence from the US and we were never able to question or cross-examine those witnesses.
‘This is in direct contrast to the rights of defendants in the US legal system.
‘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?’
A spokesperson for HP, now known as Hewlett-Packard Enterprise, said: ‘We are pleased that this decision brings us a step closer to the resolution of this dispute.
‘We look forward to the further hearing at which the final amount of HPE’s damages will be determined.’
Jeremy Sandelson, who was appointed by the court as administrator of Dr Lynch’s estate, said he would be ‘examining the judgment carefully’, including whether to appeal both the 2022 ruling and the judgment today.
Meanwhile inquest proceedings in the UK are looking at the deaths of Dr Lynch and his daughter Hannah, as well as Morgan Stanley International bank chairman Jonathan Bloomer, 70, and his wife, Judy Bloomer, 71, who were all British nationals.
Lawyer Chris Morvillo, his wife Neda and Canadian-Antiguan national Recaldo Thomas, 59, an onboard chef, were also among the dead.
Fifteen people were rescued, including Dr Lynch’s widow Ms Bacares, who has her own assets which are legally separate from her late husband’s estate – and are therefore not impacted by the ruling.
Banking boss Jonathan Bloomer and his wife Judy died in the superyacht disaster last August
Clifford Chance lawyer Chris Morvillo and his wife Neda Morvillo were also among the dead
The body of chef Recaldo Thomas was discovered on the day of the sinking in August last year
The recovery mission to bring up the wreckage of the vessel concluded after the 184ft hull and 236ft mast, as well as deck furniture and other loose items, were delivered to Italian authorities last month in Palermo.
The hull was recovered on June 21 and transported around 12 miles to Termini Imerese the next day by one of the most powerful floating sea cranes in Europe.
On June 23 it was lifted into heavy steel supports on the quayside, which had tarpaulin underneath to prevent pollution.
The cradle was custom-designed to fit the shape of the hull and built in the Netherlands. The mast had been detached from the hull for the recovery and was on the seabed.
It was salvaged using inflatable lifting balloons and delivered to port on June 25, along with loose items that may have moved away from the vessel during the past ten months.
Remote-controlled submersible equipment was used to locate the debris in the vicinity of the Bayesian site.
The vessel was originally expected to be raised in May but salvage efforts were delayed after a diver died during underwater work, prompting greater use of remote-controlled equipment.
About 70 specialist personnel were mobilised to Porticello from across Europe to work on the recovery operation.
