RBS & Cerberus accused of rigging sale

Neil Mitchell, former chief executive of Torex Retail, has accused the Royal Bank of Scotland (RBS) and Cerberus, an investment firm, of conspiring to rig the sale of Torex, which RBS had pushed into administration.

Mr Mitchell is claiming that the software company was bought for £204 million by Cerberus in 2007, after RBS, one of its lenders and the bank leading the sale, colluded to rig the auction. He alleges that other distressed-debt funds, such as Golden Gate Capital, made higher bids for Torex, however they were ‘shut out’ from receiving key information on the company.

Golden Gate Capital reportedly offered £390 million for Torex, which is substantially more than the price paid by Cerberus.

The lawsuit against RBS and Cerberus also names KPMG, a professional services firm that oversaw the sale, along with two of its partners individually as defendants. Both RBS and KPMG have denied any wrongdoing, advising that the claims have no merit, and have applied for the proceedings to be struck out.

This lawsuit comes as around 100 businesses are claiming RBS pushed them into administration, and into their Global Restructuring Group, to profit from their losses. These businesses have since formed groups to raise funds to bring legal action against RBS.

The Financial Conduct Authority (FCA) have been investigating the allegations, and a draft report has been sent to RBS for its review and comments.

This follows the 2013 Tomlinson Report by Lawrence Tomlinson during his tenure as the Serial Entrepreneur in Residence at the Department for Business, Innovation and Skills. The Tomlinson Report provided evidence of RBS artificially creating defaults to allow them to seize businesses assets.

Following the accusations, RBS commissioned a report by legal firm Clifford Chance in 2014 to investigate, however no evidence of wrongdoing was found.

Torex were put into the GRG unit following Mr Mitchell disclosing information to the Serious Fraud Office regarding an earlier fraud, with RBS ruling the firm had breached the terms of its loan covenant.

Following this, Mr Mitchell was dismissed from his position, and now alleges that a claim for unfair dismissal was hindered by the sale of the company.

This is the latest in a line of financial issues against RBS, including a £4 billion lawsuit from shareholders who claim they were duped by the Bank over its rights issue at the onset of the financial crisis in 2008.

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