The write-downs, which could be as high as pounds 500m on assets valued at nearly pounds 2bn in the last accounts, will leave Queens Moat with barely enough assets to cover its debts.
Bankers learnt the news yesterday from Grant Thornton, the accountants they brought in to conduct an independent investigation into the company's financial affairs, at a meeeting held at the London office of the lawyers Allen & Overy.
The steering committee of the banks, led by Barclays and National Westminster, said at the meeting that a reconstruction of the group's finances could be completed.
They recommended to the banks that they extend the existing standstill on the group's debts until October. Interest payments on the debt last year amounted to more than pounds 1m a week.
Queens' shares, suspended at 47.5p when the group's troubles first emerged, are unlikely to be traded again until the reconstruction is completed.
Andrew Coppel, the former Ratners finance director drafted in to reorganise the group's financial management structure, has replaced Charterhouse with Morgan Grenfell as the company's merchant bank to put together the rescue package.
He also confirmed yesterday that Bird Luckin, the group's auditors, would be replaced by Coopers & Lybrand.
This week Martin Marcus, Queens' deputy chairman, and David Hersey, the finance director, resigned. Speculation that John Bairstow, the chairman, would also quit has been discounted. A banker said: 'His name did not come up at the meeting.'Reuse content