Deal set to give reprieve to Cattles

If formally backed by creditors and shareholders at imminent votes, the deal will let Cattles avoid administration and save 2,500 jobs in the short to medium-term.

The Batley-based group, brought to its knees by a long-running accountancy scandal, called the restructuring the "best possible outcome" for creditors and shareholders.

Cattles is lining a scheme of administration where a new company, Bovess Ltd, will buy it for 5.3m, delisting it and giving shareholders 1p per share.

"When we started on this track in July 2009 I do not think anyone outside gave us a hope in hell of completing this restructuring," said executive chairman Margaret Young. "We've always believed we could do it. It's the best possible outcome in this situation."

The group also revealed pre-tax losses of 685.4m in its long-delayed 2009 accounts.

Bondholders and banks are together owed about 2.4bn of debt by Cattles and its main subsidiary, Welcome Finance. It has been trying to restructure for the past year, with creditors at loggerheads over competing entitlement to debt.

After a lengthy legal battle the Supreme Court ruled in July that banks have first call on its assets if the group goes into administration.

Some bondholders walked away from negotiations in September. If the restructuring is passed, bondholders owed 750m will get 49m, or between 30m and 39m if it is rejected.

Cattles said since the start of 2009 it has collected 1.1bn from its Welcome's loan book, plus returned its Shopacheck and The Lewis Group arms to profit.

Ms Young said she expects a two-to-three-year wind down, with the restructuring giving a "stable platform" to do so.

"It's good for employees," said Ms Young. "Because we're remaining outside of administration we're staying in control of our own destiny."

She said the planned restructuring, which received "sufficient" support from creditors, was the culmination of "long and complex" discussions.

The scheme of arrangement needs the backing of 75 per cent of voting creditors and shareholders. The group has between 80,000 and 100,000 shareholders.

If they do not vote it through, Cattles said administration is likely.

If so, its 'Plan B' involves a pre-pack administration, which would leave shareholders with nothing.

Cattles' board is unanimously backing the restructuring.

Four of Cattles's directors – Ms Young, David Haxby, Frank Dee and Alan McWalter – said they would resign once the restructuring was completed. Robert East will stay on as managing director, as will Paul Felton-Smith, as finance director.

The group added it has set aside 90m to be paid into the Financial Services Compensation Fund to cover future liabilities on "certain regulated products" sold by Welcome.

Cattles has long admitted it has no hope of restarting lending and an orderly collection of loans is the best scenario. Cattles lent to households unable or unwilling to access credit from high street lenders. In 2009 it uncovered an 850m hole in its accounts, forcing it to sack six senior executives, suspend new lending and its shares and call in the Financial Services Authority.

Cattles did not update on potential legal action against former employees.