View from City Road: Queens Moat heads for unhappy finale
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.As LIG and its army of bankers and advisers gleefully launch themselves on the path to financial reconstruction, filled with youthful hope and expectation, another company, Queens Moat Houses, winds its way wearily down the same road, forlornly wondering whether it's ever going to reach the other end. Not since the days of Brent Walker have bankers, directors, stock holders and advisers found the process of reconstructing a technically insolvent company so laborious and painful.
As the company's heavily qualified accounts are posted to shareholders, the public relations face is still one of brimming self-confidence. But then with a team of advisers that includes Warburgs to the lending banks and Morgan Grenfell to the company, it would have to be. Agreement on reconstruction proposals is now just days away, insiders insist, and there's every prospect of a happy ending. Well, possibly, but to the outside world the final chapter looks to be at best a miserable one.
The main problem is as it's always been - the position of the first mortgage debenture holders. They have first charge over some of the best hotels in the group including the Royal Crescent in Bath and the Caledonian in Edinburgh.
Under the terms of the debenture, any shortfall in the value of their security has to be met from the group's other assets. So far Morgan Grenfell has done a remarkably effective job in persuading debenture holders to hold fire. Secured creditors do not, however, give up any of their rights lightly; the reconstruction will have to honour their position if it is to win support.
Other lenders are as a consequence going to be left with such poor cover that they must begin to wonder whether it's really worth the candle. At best they face the prospect of massive debt write-offs. Ordinary shareholders can forget it; they would be better off with Russian railway bonds. Not such a happy ending after all.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments