Maxwell chief sues receiver
Wednesday 31 May 1995
Basil Brookes, former finance director of Maxwell Communications Corporation (MCC), has lodged a claim for pounds 300,000 against the administrators of MCC, Price Waterhouse, for pay in lieu of notice and pensions benefits.
The accountancy firm has 28 days to lodge its defence against the claim in the courts. Mr Brookes said that "loads of other ex-MCC employees have lodged claims".
Mr Brookes is bringing his case under the controversial Paramount court ruling, which allows sacked employees of bust companies to claim their contractual rights from the company's receiver.
UK receivers have fought a bitter battle to overturn the ruling, but their hopes of retrospective legislation to solve the problem were finally rejected by the Government last month after a two-year fight.
Receivers are expecting more high-profile claims like that of Mr Brookes to emerge in the coming months. Three former directors of Olympia & York, the developers of Canary Wharf in London, have lodged a claim totalling pounds 10m against the scheme's administrators, Ernst & Young.
Under the Paramount ruling, employees not sacked within 14 days of a receiver taking over a company may sue for their contractual redundancy payments and pensions contributions. The receiver is deemed to have adopted their contracts. The ruling two years ago overturned practice going back to 1986.
Emergency legislation last year solved the problem for new cases, but the Government refused to help receivers over companies that went bust between 1986 and 1994.
Mr Brookes resigned as finance director of MCC, the US-based part of Robert Maxwell's business empire, just before the tycoon's death in September 1992. Mr Brookes was persuaded to return to MCC following Mr Maxwell's disappearance to help save the group.
Price Waterhouse was appointed by the courts to take over the group soon afterwards and Mr Brookes was laid off. He is currently finance director of Wilmington Publishing.
Mr Brookes said yesterday that he originally lodged a claim for pay in lieu of notice three years ago, and that his case was later strengthened by the Paramount ruling.
He said he found it ironic that receivers were complaining that the ruling allowed incompetent former directors to bring claims. "PW made pounds 10m from this administration and they can't even write to all the employees."
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