HP to Mike Lynch: See you at the Old Bailey - we'd like $5.1bn, please

HP sues Lynch and Hussain for $5.1bn in London, claiming they 'engaged in fraudulent activities'

HP is suing Autonomy founder Mike Lynch for $5.1bn (£3.4bn) in the UK courts - while Lynch claims that he will counter-sue for $100m in damages in retaliation for the aggravation caused by HP's claims.

It follows the filing of papers against Lynch and Autonomy chief financial officer Sushovan Hussain over claims that they manipulated Autonomy's sales figures prior to the sale of the company to HP for $10.9bn (£7.1bn) in 2011. It has since written down the value of that purchase by three-quarters, claiming that Lynch presided over an accounting scam that inflated the sale of the company's software.

HP confirmed the legal move on Tuesday.

"HP can confirm that, on March 30, a claim form was filed against Michael Lynch and Sushovan Hussain alleging they engaged in fraudulent activities while executives at Autonomy. The lawsuit seeks damages from them of approximately $5.1bn. HP will not comment further until the proceedings have been served on the defendants," claimed the company in a statement.

Lynch, however, hit back. In a statement of his own on the website he set up to defend himself and the former management at Autonomy, he said:

"The former management of Autonomy announces today they will file claims against HP for loss and damage caused by false and negligent statements made against them by HP on 20 November 2012 and in HP's subsequent smear campaign. Former Autonomy CEO Mike Lynch's claim, which is likely to be in excess of £100m, will be filed in the UK."

While an investigation into the acquisition is still ongoing in the US, overseen by the Department of Justice, the UK's Serious Fraud Office officially dropped its case in January.

Lynch claims that HP failed to conduct its due diligence properly and that HP's board failed to appreciate the differences in accounting rules in the US and UK on revenue recognition for software sales. UK accounting rules follow the International Financial Reporting Standards (IFRS). HP, though, claims that Autonomy booked "imaginary deals" in order to inflate its share price.