Slater and Gordon’s troubled UK business is to be divided from its Australian parent into a holding company owned by the indebted firm’s senior lenders.

In an announcement to the Australian Stock Exchange (ASX) today (31 August), the listed firm confirmed that as part of a recapitalisation deal with its creditors, the UK operations would be separated from the wider firm.

It will then be transferred to a separate holding company that will be wholly owned by the firm’s senior lenders.

Slaters – which in 2007 became the first ever law firm to go public when it listed on the ASX – entered the UK market in 2012 with the £53.8m takeover of Russell Jones & Walker. This was followed by a flurry of acquisitions, culminating in the £637m acquisition of insurance company Quindell’s professional services arm in 2015.

However, the firm has since been beset by difficulties, and in August kicked off a strategic review of its UK business legal services function after significantly writing down the value of the UK business in February.

The firm’s statement to the ASX says: “The company believes that separation of the UK operations provides the best option to enable both the Australian and UK operations to succeed in their own right and will enable the company to focus its management’s time and resources on the Australian business”, the statement said.

Total revenue for the 2016-17 financial year fell 33% from A$908.2m to A$611.5m, with the firm reporting a $546.8m loss for the year ending 30 June 2017.

Fee and service revenue for the firm’s UK arm plummeted 31% from A$230m to A$157.8m, which the firm attributed to “the reduction in size of business following the business rationalisation programme”. The firm has already reduced UK headcount by 20% and closed at least 18 of its 48 UK offices.

Slaters has also announced that Melbourne-based group chief financial officer (CFO) Bryce Houghton is stepping down, with the firm set to recruit a new CFO for the Australian-listed entity.

This June, Slaters’ lenders took control of the beleaguered firm as part of a recapitalisation plan led by New York hedge fund Anchorage Capital.

Last month RollOnFriday reported that the firm was making “dozens of UK lawyers redundant”, but a spokesperson declined to comment.

Shortly after the Quindell deal was announced in March 2015, the insurance company was placed under investigation by the Serious Fraud Office over its previous accounting practices. This June, Slaters served a £600m claim against Watchstone Group – Quindell’s new identity – over the deal.