Creditors of the collapsed personal injury company The Accident Group yesterday called for the business to be put into liquidation to give investigators the power to pursue its former directors if they are found to have traded wrongfully.
At an angry meeting in Manchester, former employees and business partners of the company stopped short of the liquidation option. A committee of five creditors including Lloyds of London and the TUC voted instead to keep TAG in administration for the time being to try to raise some funds from the business as a going concern. Employees and companies that did business with TAG were told yesterday that they are unlikely to recover any of the money they are owed by the company.
A number of creditors called for TAG to be put into liquidation. This would enable whoever is appointed as liquidators to investigate whether the company continued trading when insolvent and see if any blame could be apportioned to its directors and advisers.
Bryan Slater, a solicitor at Manchester based Slater Ellison, said TAG's remaining funds should not be spent on keeping the company in administration. "'The money should be going into an investigation into whether there was wrongful trading,"' he said.
TAG's parent company Amulet Group collapsed on 30 May after it ran out of money to pay its employees' wages and after banking group HBOS refused to advance £4.5m of funds. As a consequence, TAG sacked its 2,521 workforce, some by text message and left about 3,500 creditors owed collectively millions of pounds.
Michael Horrocks, who is leading the administration for accountants PricewaterhouseCoopers revealed at the closed meeting that he had asked Mark Langford, who founded TAG and is reported to have amassed a fortune, whether he would pay the wages himself. "Mr Langford declined," Mr Horrocks said.
Figures unveiled by PwC show that TAG declined dramatically in the first half of this year. While it recorded a £17.8m profit in 2002, in the eight months to April it racked up a pre-tax loss of £56.7m. By the end of June, when the company had gone into administration, TAG's net liability was £81m.
Mr Langford, through his lawyers Farrer & Co, has vigorously denied that he and his fellow nine directors of TAG continued to run the company, employing staff and spending money when it wasn't solvent.
TAG was advised by Clifford Chance from February 2003. The law firm did not advise the group to stop trading, according to Farrer & Co. KPMG audited TAG's 2002 accounts, taking over from Arthur Andersen, which signed off the 2001 books.
The Inland Revenue as a "preferential creditor" will collect only 8.2p for every pound it is owned by TAG, PwC revealed. Ordinary creditors will probably only receive money if they successfully sue its former directors and possibly its auditors and advisers.
Mr Horrocks said because PwC is acting as an administrator rather than a liquidator it would not be able to pursue any party over a potential wrongful trading claim. However PwC is looking at whether a £7.6million dividend paid to the directors in 2002 was appropriate.
TAG restated its accounts for that year in a move which may have altered the picture of its financial health. Mr Horrocks said: "Based on the management accounts at the time" there was "sufficient" money for the dividend. However based on the restated accounts the dividend might not have been appropriate.
"It is that sort of information we need to put together for a case to go to legal advisers and counsel," Mr Horrocks said.
The Committee of five creditors which also includes the Inland Revenue will advise PwC over the next few weeks and may decide at a meeting at the end of September to put the company into liquidation. Outlook, page 3Reuse content