Beaverbrook preparing to declare bankruptcy

Lord Beaverbrook, the former treasurer of the Conservative Party, said yesterday he was preparing to declare himself bankrupt after creditors rejected a proposed private settlement.

He said his main creditors were the Inland Revenue, which claims it is owed pounds 2m, the Royal Bank of Scotland, which he owes pounds 1.5m, Coutts Bank ( pounds 1.5m) and Barclays Bank ( pounds 350,000).

He raised pounds 38m for the Tories before resigning as treasurer in April, but while he was raising the money that enabled them to win the general election, his personal finances were crumbling.

He had made his money trading classic cars, buying the most rare and valuable. 'I'd gone fairly strongly into important Ferraris in the early 1980s and made a lot of money. Several millions,' he said. On some he realised the profit, but more usually he borrowed money and traded up to a still more precious one. 'I tended to sell a car in order to buy a better one.'

He has been left with three Ferraris, once worth pounds 5m between them, but now, because of their rarity, with a value that can only be determined, like a Rembrandt, by putting them up at auction. The value of many classic cars has fallen by half. He has been left paying interest on the debt and interest on the interest.

His second scheme to raise a personal fortune was the purchase of a rainforest in Guyana. He said he was about to realise pounds 5m on an investment of pounds 100,000, when rumours of his financial difficulties seeped out in the City earlier this year.

'As soon as it got known that I might have problems, the market started coming down. So the value of that stock instead of being pounds 5m, today is pounds 750,000. From an investment of pounds 100,000 initially, pounds 750,000 isn't too bad. But it's a lot less than pounds 5m.'

His grandfather, the first Lord Beaverbrook, amassed a fortune from the Daily Express newspaper. But the third Lord Beaverbrook inherited only pounds 250,000.

In an attempt to come to a private settlement he offered pounds 500,000, plus his earnings and profits for the next five years, which he says would have resulted in a pay-out close to 100p in the pound. However the creditors insisted on pounds 1m up front.

Lord Beaverbrook's bankruptcy will be discharged in three years. He has resigned his directorship of NWE Capital Corporation, a Canadian medical services company, to avoid damaging its image, so his only income is a discretionary one paid by the Beaverbook Trust.

His pounds 40,000 BMW M5 car has been repossessed, but his home, Denchworth Manor, near Wantage, Oxfordshire, cannot be touched as it is rented from the family trust.

(Photograph omitted)