Month in Focus

Samuel Montagu, the merchant bank subsidiary of HSBC, has been ordered to pay £172 million damages to British & Commonwealth, the failed financial services group. Montagu had negligently misstated that its client, Quadrex, had sufficient funds to purchase two money brokers from B&C in 1987 (see News Brief this issue).

In a separate move, Ernst & Young, administrator of B&C, is reported to be considering an action against BZW, the merchant bank subsidiary of Barclays, for negligent advice on £416 million takeover of Atlantic Computers by B&C in 1988.

Virgin Atlantic, Richard Branson’s airline has filed an anti-trust action in New York against British Airways.

Virgin is claiming $320 million in damages. A US court could treble any award. Virgin also seeks an injunction banning BA from acts allegedly distorting competition (see Virgin/British Airways: the shortcomings of competition law, PLC, 1993, IV(I), 6).

A record 651 directors were declared “unfit” and disqualified from running a company in the year to March, according to the government’s annual report on companies.

But in a report published in mid-October the national audit office disclosed that fewer than a fifth of directors who show signs of being unfit to run their companies are being pursued for disqualification.

The first two megabids of the decade are for telecom and media compnies − areas alredy labeled as the “oil of the 90s”.

Bell Atlantic, the second largest US regional telephone company, has launched a bid for Telecommunications Inc (TCI), the largest of the US cable television operators, to create a $9.5 billion battle for Paramount Communication.

Canary Wharf, the docklands office scheme, has emerged from administration after creditor and High Court approval of a £1.1 billion reconstruction package.

The rescue of the London docklands development is the biggest so far to be completed under the Insolvency Act 1986 and is reported to have cost more than £20 million.

Tiny Rowland has ended his eight year battle waged against the Fayed brothers over their £615 million takeover of the House of Fraser department stores group in 1985.

Both parties have dropped all legal action. Tiny Rowland estimated that his legal costs had amounted to £40 million and were running at £10,000 a day.

A new charity has been launched to help Whistleblowers − Public Concern at Work (PCW).

PCW provides a telephone helpline to give free legal advice to people worried about wrong doing at their workplace and a range of consultancy, training and conciliation services for companies, public bodies, trade unions and professional associations. Helpline: 071 404 6609

Funds established to raise corporate capital for Lloyd’s are reported to a attracting a flood of money. Neither the funds nor their shareholders are subject to the traditional unlimited liability assumed by Lloyd’s names. But the new structure favours traditional names in allocating capacity which may leave the new companies over-funder (see PLC, 1993, IV(5), 5 and IV(9), 6).

Whitbread has announced plans to scrap its two-tier share structure by equalizing the voting rights of the two classes of shares.

Such structures were once common, the shares with the most votes normally being kept in family hands, to make companies less vulnerable to takeover. But the City views them with disfavour and they limit access to new equity capital. Of FT-SE 100 companies, only Schroders now retains a two-tier share structure.

France’s privatization programme got under way in earnest with the sale of 40 per cent of Banque Nationale de Paris. Rhône-Poulenc, the drugs and chemicals group, and Elf Aquitaine, the oil firm, are next in line in the French government’s privatization programme.

Touche Ross, the liquidator of collapsed Bank of Credit and Commerce International (BCCI), is lodging a £500 million claim against the Bank of England. Touche alleges that the Bank failed in its role as a regulator of BBCI which closed down in July 1991.

In a separate development, a Luxembourg court has rejected a $1.7 billion compensation agreement between the liquidators of BCCI and the Abu Dhabi authorities.

Creditors may now have to wait 10 years before receiving any compensation.