Cattles chiefs stave off calls for resignation

Led by rebel shareholder Barry Dearing, the investors demanded justice after an accounting scandal at the Batley-based lender wiped out the value of their shares.

They called for the resignation of executive chairman Margaret Young, as well as non-executive directors David Haxby, Frank Dee and Alan McWalter at the firm's annual general meeting in the Queen's Hotel, Leeds, which lasted four-and-a-half hours.

They claimed non-executive directors failed in their duties, let accounting errors go unnoticed and failed to act in shareholders' interests.

Cattles urged shareholders to vote against the special resolutions, insisting they were not in the interest of the company or its stakeholders.

The resolutions were defeated by 60 per cent of investors.

Journalists were denied entry to the meeting but the Yorkshire Post has been told what was said.

Mr Dearing said afterwards: "I was disappointed because one does not like to be beaten but when you consider that I am one person against the might of the City, to get support from 40 per cent of shareholders is encouraging."

He added: "I will continue to take an interest in Cattles because I still want answers to the questions board didn't answer. I want to know who was responsible for losing all this money."

The meeting included three hours of questioning from 50 different shareholders.

Shareholders also voiced their anger that they are unlikely to get more than 1p per share from a possible scheme of arrangement which will see creditors take control of the company, paying shareholders a total of 5.25m.

The company said in a statement: "The board very much regrets the serious loss suffered by shareholders and understands their frustration.

"Nevertheless, in these circumstances the board's legal obligation is to give priority to the interests of the company's creditors."

Cattles is winding down its core Welcome Finance arm, which lent money to cash-strapped households, to recoup money for creditors, the largest of which is Royal Bank of Scotland.

Welcome still has 1.1bn of loans outstanding, compared with 2.2bn in December 2008.

The company said its other subsidiaries, Shopacheck and The Lewis Group, continued to trade but do not represent any serious chance of recovering any value. The board confirmed there was a 1bn difference between what the company owes to creditors and what is owed to the company.

There was heated opposition when it was revealed that Mrs Young is being paid fees of 2,500 a day for her full-time role while finance director Jamie Drummond Smith earns 2,000 a day, chief restructuring officer Robert East is paid 420,000 a year while the three non-executive directors, David Haxby, Frank Dee and Alan McWalter have annual packages worth 57,500 each.

Mrs Young confirmed that financial regulators were looking into the conduct of Cattles' advisers, including auditors

PricewaterhouseCoopers, and the company had retained City law firm Berwin Leighton Paisner to advise it on whether to pursue legal action.

Last month Cattles revealed long-delayed results for 2008 which showed losses were nearly 200m higher than first thought at 745m.

While the audit of the 2009 accounts has not yet been completed, the company said it was already clear that the size of this deficit would have increased significantly since December 31 2008, principally due to further impairment of the loan book.

Mrs Young said after the meeting: "On behalf of the board and all of our employees, I would like to thank those shareholders who have supported the board at this difficult time for the company.

"Your support will help us achieve our objective of a consensual restructuring of the company, which we hope will include an offer for shareholders."

Shareholders frustrated

Shareholders expressed frustration at what they said was a reluctance of Cattles directors to answer their questions at yesterday's AGM.

Gavin John, from Cardiff who owned over 30,000 worth of shares, said: "It was four-and-a-half hours of complete avoidance to answer any questions. I have had enough of it all."

Judith Tope, a shareholder from Salford, added: "They kept saying it was inappropriate to give us that sort of information."

All of the resolutions proposed and recommended by the board were passed with the exception of one to shorten the notice period for general meetings.