Fury over Imperial offshoot's secret sale

Accountants are blasted after bosses buy collapsed financial services firm in 'astonishing' deal

One of Britain's leading accountancy firms, Pannell Kerr Forster (PKF), has come under attack from victims of the Imperial Consolidated collapse, for selling a subsidiary back to its own directors. Creditors of Imperial say PKF's decision was "astonishing".

Mirfield Financial Services, which was set up in 1979, specialised in high-interest, low-value, shorter-term loans to people on low incomes. It was a successful and well-regarded company when Imperial Consolidated bought it in early 2000.

As reported by The Independent on Sunday a year ago, the new management's controversial methods brought it into legal conflict with rival credit companies.

Mirfield was fined for contempt of court and was forced to pay damages of £1m for poaching agents and clients in breach of guidelines and undertakings it had given.

After the Imperial Consolidated Group went into administration in June, Mazars Neville Russell, the administrators, told creditors they did not expect a quick sale of Mirfield despite the size of its loan book.

"While there is £12m outstanding this is not an attractive portfolio for a sale and we anticipate it may take some time to achieve a sale at a reasonable figure," said Phil Lyon of Mazars.

But, unknown to Mazars, directors of Mirfield put the company into administration at Leeds High Court and appointed the Leeds office of PKF as administrators.

PKF's offshore affiliates have already attracted criticism in the Imperial scandal for providing audits of Imperial's mutual funds and banks.

In just three weeks PKF has sold the loan company back to its directors for £3.6m on a deferred consideration basis, which means very little cash will be paid up front.

Mazars has also criticised PKF. "It is unfortunate that Pannell Kerr Forster did not have the professional courtesy to tell us what they were proposing until it was fait accompli," said Mr Lyon, "particularly as we are the 100 per cent shareholders and the major creditor by a considerable margin."

But Ian Scofield of PKF expressed his surprise at this criticism saying: "We have kept Mazars informed over the sale." He added that he believed PKF was getting the best available deal and had acted professionally throughout.

Mr Scofield also said that he advised Mirfield's directors to inform Mazars that they intended to put the company into administration. "They took legal advice and chose not to do so," he said.

Bill Hershaw, an investor in Imperial, has written to his constituency MP, Gordon Brown, and the Financial Services Authority to complain about the sale of Mirfield.

Paul Austin, another Imperial Consolidated victim who represents a group of expatriate creditors, said the sale "beggars belief".

Criticism has also come from the Miami-based Offshore Alert newsletter, which has closely monitored Imperial over the last two years.

Publisher David Marchant said yesterday: "I find it astonishing that the directors of Mirfield Financial Services, who bankrupted a 21-year-old successful company within two years of Imperial buying it, can apply for administration without informing the major creditor."

A spokeswoman for PKF denied any conflicts of interest. "This assignment was accepted after conducting our standard search for potential conflicts of interest. This did not reveal any potential conflicts of interest," she said.

The controversy comes at the same time as Mazars has obtained Mareva court orders on two of Imperial Consolidated's former directors, Lincoln Fraser and Jared Brook, freezing their personal assets.