Firm's directors may be disqualified

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CORK Gully, the receivers appointed to the public relations group Corporate Communications that collapsed owing pounds 21m in July, said yesterday that the company may have been trading wrongfully for as long as five months before its collapse.

In reply to a question from Brian Gibbs, the former finance director of Corporate Communications, about the group's trading between 6 March and 22 July, Steven Hook of Cork Gully said: 'We are examining the conduct of the directors and Corporate Communications may have been wrongfully trading during this period.'

Cork Gully will send a report to the Department of Trade and Industry on Corporate Communications that could lead to directors of the group being disqualified and leave them open to legal action from creditors.

Peter Willetts, one of the two founders of the group, said: 'As far as I am concerned, after legal advice, there is no question that we were trading wrongfully.'

The receivers also admitted that the corporate finance department of Coopers & Lybrand, Cork Gully's parent company, valued Corporate Communications' largest asset, US group Georgeson International, at between dollars 20m ( pounds 12.3m) and dollars 22m one month before the group's collapse.

The business was sold to its management, within hours of the receivers being appointed, for dollars 11.6m. The Coopers report was prepared for US&G, a shareholder in the company and one of the Georgeson buyout backers.

Mr Hook said the price received for Georgeson was a good one, as the Coopers valuation was based on an extensive sales programne that Mr Hook said could have led to key members of staff leaving the company.

It has also emerged that Georgeson was sold with a guarantee, which means Corporate Communications' creditors could be liable for the US group's debts, up to dollars 9m, so cutting the amount received for Georgeson to dollars 2.6m.