Cattles’ investors hail £16m payout victory

The Birstall-based company settled at the eleventh hour just ahead of appeal papers for the 60 claims being presented to the Companies Court in London.

Leeds-based law firm Clarion described it as a landmark settlement as it is thought to be the first time a subsidiary business, in this case Welcome Financial Services, has paid compensation to shareholders in the collapsed parent company, Cattles.

Shareholder leader Barry Dearing said: “This is a little justice for the little people. One elderly shareholder told me his settlement will pay for his knee operation.

“I didn’t like the way the London lawyers treated the older shareholders. There is a sense of justice.”

Clarion partner Paul Burkinshaw described the settlement as “remarkable”.

“A lot of credit is due to Barry. He came to us late in the day. We had just three days to get everything off to 60 shareholders. Our clients needed pressure exerting. We had to drop everything and run hard to make it work.”

But the landmark case will not offer any hope for the 30,000 shareholders who accepted the 1p per share compensation.

The cut-off date for shareholders to claim as creditors was June 2011.

Cattles said it was unable to comment on the settlement for legal reasons.

Shareholders were able to elect to become creditors earlier last year, but only 60 did.

The 60 shareholders, who include private individuals and a number of charities, lost millions of pounds when Cattles’ shares were suspended in April 2009.

Mr Dearing said they have fought for three years to secure redress.

Clarion partner Simon Young said: “The settlement is welcome news for the shareholders after a long battle and should reduce the losses sustained by them to a slightly more bearable level.”

Mr Dearing said the 60 successful shareholders will get 27p in the pound, much higher than the 1p in the pound accepted by the majority of shareholders.

The payout will depend on how many shares each investor owned, but Mr Dearing said the minimum settlement is £6,000 and the maximum is over £3m.

“It’s an honourable settlement,” he said. “It recognises that shareholders have lost the money they paid for their shares.

“We presented a formidable case about the value of the shares.

“We received misleading information and the profits were illusory.”

In March, the Financial Services Authority watchdog fined and banned two former directors of Cattles for publishing misleading information to investors and “acting without integrity in discharging their responsibilities”.

The city watchdog also publicly censured Cattles and its subsidiary Welcome Financial Services.

The group, which lent money to cash-strapped households, was brought to its knees by a long-running accountancy scandal, which saw its proportion of bad debts understated for years.

James Corr, Cattles’ former finance director, was fined £400,000 and Peter Miller, Welcome’s former finance director was fined £200,000, and both have been banned from performing any functions in areas the FSA regulates.

Cattles was a member of the FTSE 250 but delisted last year. Most of its business was conducted through its subsidiary, Welcome.

According to the FSA, Cattles’ 2007 annual report contained “highly misleading arrears, impairment and profit figures”.

Cattles is preparing to claim for “substantial damages” against former auditors PricewaterhouseCoopers, alleging “gross misstatement” of its accounts.

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