Warburg faces pounds 115m action: Irish leasing firm sues merchant bank and Linklaters & Paines

SG WARBURG, the merchant bank, and the lawyers Linklaters & Paines face a long court battle to defend a pounds 115m legal action against them by the Irish leasing firm, Yeoman International.

The case is one of the largest claims against a British law firm or merchant bank and is the largest taken out against either Warburg or Linklaters.

The trial is due to start on 11 January in the High Court, which has set aside 20 weeks for the hearing.

Yeoman is claiming that Warburg and Linklaters were negligent in their advice to the Irish group when it paid pounds 93m for a rival leasing group, CLF, five years ago.

Only four months after the purchase, the discovery of a pounds 12m loss at one of CLF's subsidiaries, Technology for Business, forced the group into an emergency pounds 15m rights issue, which was underwritten by Warburg.

Despite the rights issue, further problems emerged within Yeoman, and the group was forced into a refinancing in 1991 that led to its shares being delisted by the London Stock Exchange.

The action brought by Yeoman is actually a counter-claim against a writ taken by Linklaters claiming pounds 230,000 of unpaid fees from Yeoman over the deal.

In its counter-claim, Yeoman is alleging that Warburg and Linklaters should have identified the problems within CLF. It says that the true value of CLF at the time it bought the company was just pounds 25m and is suing for the pounds 68m difference plus accumulated interest.

Both Warburg and Linklaters are vigorously defending the action. Warburg, following advice from the law firm Berwin Leighton, has not disclosed the action in its accounts as a contingent liability, despite the fact that the banks that have lent more than pounds 40m to Yeoman have set aside a special fund to pay for the legal action because of their confidence of its success.

Linklaters is denying liability. It has asked another firm, Barlow Lyde-Gilbert, to advise it on its defence, and is arguing that there was contributory negligence on the part of Yeoman.

No one on either side will deny that it will be a long and unpleasant battle.

Life and Style
food + drink
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

COO / Chief Operating Officer

£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments