£1.6m settlement for Cattles stakes
Shareholders who refused an offer of 1p a share for their stakes in sub-prime lender Cattles were celebrating a £16 million settlement today.
The group of 60 claimants has been locked in a legal battle with Welcome Financial Services, a subsidiary of Cattles, since its shares were suspended in 2009.
The largest individual payout is understood to be more than £3 million, while the smallest is around £6,000, depending on the number of shares owned.
Barry Dearing, who led the shareholder group, told the Yorkshire Post: "This is a little justice for the little people. One elderly shareholder told me his settlement will pay for his knee operation."
West Yorkshire-based Cattles, which went private last year in a bid to avoid administration, agreed at the "11th hour" to pay an average of 27p a share to 60 claimants who elected to be treated as creditors rather than shareholders.
The landmark settlement is believed to be the first time a subsidiary business has paid compensation to shareholders in the collapsed parent company, according to legal representatives of the shareholders involved.
Some 30,000 shareholders did accept Cattles' 1p a share offer and the cut-off date for shareholders to claim as creditors was last June.
The 60 shareholders, including private individuals and a number of charities, lost millions of pounds when Cattles' shares were suspended in April 2009.
The Financial Services Authority in March fined and banned two former directors of Cattles for publishing misleading information to investors and "acting without integrity in discharging their responsibilities".
The group, which lent money to cash-strapped households, had been labouring under £2.7 billion in debts and was also hit by accounting irregularities when it suspended its shares.
According to the FSA, Cattles' 2007 annual report contained "highly misleading arrears, impairment and profit figures".
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