Former directors and shareholders of Unwins, the bust off-licence chain, have insisted that they gave adequate warnings to the private-equity firm which bought the company this year, dismissing threats of legal action as unfounded.
DM Private Equity, which bought Unwins for £32m in March, said on Tuesday that it plans to sue former directors and shareholders as well as the company's former auditors, Grant Thornton, after it allegedly discovered a £13.5m hole in the company's accounts.
Unwins was put into administration late on Monday, after its bankers, HBOS, pulled the plug on the company. The following day, it announced it would be making the vast majority of the 1,900 workforce redundant.
However, sources close to the former Unwins board said DM was made perfectly aware of the state of the business when it bought it, and was warned that Unwins would need a cash injection and a restructuring to restore it to its former glory.
DM claims that after completing the deal and getting a closer look at the books, it discovered that Unwins' net assets were worth some £10.8m less than they had been led to believe, while accounting errors had produced a further £2.4m of unexpected costs.
The former board, however, is believed to contend that after the purchase, DM revalued Unwins as though it was no longer a going concern, the major reason as to the discrepancy in the two sides' numbers.
David Massey - one of the key players in the Unwins bid - quit the board three months ago, six months after joining it. He was believed to have been unhappy with the way the venture was moving.
The administrators were finalising the sale process of parts of the business yesterday. It is believed Threshers, owned by Terra Firma, Wine Cellar and Whittalls Wines are among the bidders for the leases of Unwins' shops.Reuse content