Ex-B&C chief gets pounds 1m redundancy

JOHN WILLCOCK

Financial Correspondent

John Gunn, the former chairman of British & Commonwealth, the financial group that crashed in 1990, has received a redundancy payment of pounds 1m from administrators Ernst & Young.

Around 40 other former B&C employees shared a pounds 3m payout from the administrators following the Paramount case in March. The Law Lords ruled that former employees of companies which collapsed between 1986 and 1994 and who had been kept on by receivers for more than 14 days were entitled to compensation in lieu of notice, pensions and holiday entitlements.

Mr Gunn and two other former B&C directors are still facing disqualification proceedings by the Department of Trade and Industry over the company's collapse. Mr Gunn led B&C on an ill-fated pounds 2bn spending spree in the 1980s.

Colin Bird, president of the Society of Practitioners of Insolvency, the receivers' trade body, branded the Paramount ruling which allowed the pounds 1m payout a "fat cats' charter."

He said he was "saddened but not surprised" by the payment to Mr Gunn, and added: "I am not for one moment suggesting that Mr Gunn is a fat cat. But former employees who were earning around pounds 18,000 a year will receive little if anything under Paramount."

Mr Bird also said that the Government had ignored the chance to overrule the Paramount decision, and that receivers and creditors were now paying the price.

Other former directors of failed companies who have received big payouts include two directors of Olympia & York, the developer of Canary Wharf in London's Docklands, which went under three years ago.

Robert John, Gerald Rothman and Michael Dennis originally claimed a total of over pounds 17m from adminstrators Ernst & Young. The money is coming from Canary Wharf's present owners, a consortium of 11 banks led by Lloyds Bank.

Mr Bird said the unfairness of the Paramount ruling was driven home by the experience of his own firm, accountants Price Waterhouse, which handled the collapse of the Swan Hunter shipyard.

Just three directors of Swan Hunter have received around pounds 400,000 each from Price Waterhouse, under claims similar to Mr Gunn's. This totals more than has been paid to the whole of the rest of Swan Hunter'swork force of 2,000 under the Paramount decision.

Stephen Adamson, one of the co-administrators of B&C, refused to comment on Mr Gunn's payment. He did however say: "I'm very happy to appear and give positive support at Mr Gunn's DTI disqualification proceedings. John Gunn and the other B&C executives acted very properly with us during the administration."

Mr Gunn's lawyers Gouldens are seeking to have the disqualification proceedings thrown out.

Mr Gunn is currently working with a small merchant bank in the City called Midland Scottish Resources, which buys and sells assets on its own behalf and advises others how to do so.

Compensation claims against receivers

Claimant Company Amount

John Gunn British & Commonwealth pounds 1m

Basil Brookes Maxwell Communications pounds 300,000

3 directors Swan Hunter pounds 400,000 each

John Buchanan Sale Tilney pounds 800,000

Robert John Olympia & York lower pounds 000,000s

Gerald Rothman Olympia & York lower pounds 000,000s

Michael Dennis Olympia & York higher pounds 000,000s