WALKER Greenbank, the mini-conglomerate founded by Sir Anthony Jolliffe, one-time Lord Mayor of London, has received pounds 4.6m in settlement of its case against Ernst & Young, the accountants.
The company, now under a new management team headed by Charles Wightman, chief executive, had sued the firm, which is one of the big six, and William Carr and his son, Alan, for about pounds 15m in damages and interest in connection with the pounds 3.5m acquisition of Alkar, a shopfitting company, in January 1987.
It is understood that all those involved were keen to reach a commercial solution because of the costs, length and complexity of the litigation.
Mr Wightman said: 'This settlement represents a satisfactory conclusion to the litigation. Walker Greenbank's balance sheet will be substantially strengthened, with the cash element reducing group borrowing to less than pounds 2m and gearing falling to below 10 per cent.' The shares rose 3p to 58p. Ernst & Young said it was unable to comment under the settlement.
Approximately pounds 3.7m of the settlement is in cash, with the remainder representing the Carrs' surrender of their loans to Walker.
Walker's claim against the Carrs, Alkar's previous owners, alleged misrepresentation, negligence and fraud, and stemmed from allegations that debtors and sales had been overstated to the point of insolvency. The Carrs were on a pay arrangement based on the company's performance. The deal was worth up to pounds 11m, of which they had received pounds 2.6m.
The suit against Ernst & Young alleged that the Birmingham office of Arthur Young, its predecessor firm and Walker's auditor until January 1989, was negligent in failing to spot alleged irregularities in the financial records. The firm was understood to have accepted that there were problems with the audit and the report on Alkar but could not agree on the scale of damages.
An article in 24 October's edition, headed 'Ernst pays pounds 4.6m in Walker case', gave the impression that Ernst & Young had paid the whole sum agreed under the settlement of the case brought against the firm and Alan and William Carr by Walker Greenbank. We are happy to make clear that only a proportion was payable by Ernst & Young.Reuse content