Setback for Cattles' bondholders

The Batley-based group, which is winding down its loan book after an accounting scandal, last month said it would write off inter-company claims against its biggest subsidiary, Welcome Financial Services (WFS), for "not less than 39m".

Cattles wants the money to meet its own costs plus offer bondholders an olive branch to keep them at the negotiating table.

But Cattles said "key creditors" – understood to be its banks – have told it that while they "continue to support proposals for a consensual restructuring", the group, and hence its bondholders, may have to accept "less than 39m".

Both banks and bondholders claim they have first call on Cattles' assets, but court hearings have ruled in favour of the banks.

It is understood talks to take Cattles private collapsed in September after a number of bondholders walked away from the table.

The group, whose shares are suspended, said talks continue.