Mr Midgen had previously said he intended to recapitalise the company after he and four others, led by the Singaporean financier Wilson Ng, took control of the board on September 13.
However, he said he was shocked to find that the company appeared to have liabilities of pounds 29m, of which pounds 21m is owed to banks, secured against assets worth little more than pounds 9.5m. 'The degree of indebtedness was considerably more than we had been led to believe, though we expected a surprisingly large figure,' he said.
Mr Midgen said that he and the other directors who moved onto the Waterglade board had received no information from the previous board about the extent of indebtedness. 'We had requested this information as long ago as June.
That information was not forthcoming, so we had to take the action we did,' he said.
The old board of Waterglade has denied that incoming board members were not properly informed of the precarious nature of the company's finances. 'The new directors knew the financial details of the company and had discussions with British Linen Bank on the Thursday morning before they decided to go ahead,' a spokesman for the old board said.
He said the new investors were given a full underwriting proof from the bank.Reuse content