BusinessBusiness RecoveryE&Y issues counter writ on £5m Kaupthing Singer & Friedlander storm

E&Y issues counter writ on £5m Kaupthing Singer & Friedlander storm

Big Four firm says 'there is not a shred of truth' in corruption accusations levelled at the administrators of collapsed Icelandic bank and launch a counterwrit

ernst and young building

Ernst & Young has hit back with its own legal action after a property
developer lodged a writ at the High Court seeking £5m in compensation for
administrators’ actions after the Kaupthing Singer & Friedlander collapse.

E&Y confirmed to Accountancy Age it had lodged a counterwrit yesterday
through its lawyers Olswang.

‘There is not a shred of truth in the allegations, which are seriously
defamatory to the firm and the joint administrators of Kaupthing Singer &
Friedlander,’ E&Y said in a statement.

The original writ, lodged by Chris Coomber and Dawn Burrus on 20 July at the
Chancery Division, concerns a disputed sale of a site claimed as a distressed
asset of the collapsed Icelandic bank.

Joint administrators Alan Bloom, Patrick Brazzill, Margaret Mills and Tom
Burton were all named in the writ as were E&Y’s head of real estate finance
Fraser Greenshields and Bloom’s cousin Paul Bloom.

In the writ, the pair allege that the Greystone Houses development site was
‘illegally seized’ by receivers Edward Symmons on behalf of the firm,
challenging the prospective sale of the site to Barry Allsuch Properties, the
real estate company where Paul Bloom, Alan Bloom’s cousin is an employee.

The site was eventually sold to an unrelated third party. E&Y confirmed
that Bloom was not involved in any part of the sale process, which was handled
by the LPA receiver.

On Kaupthing’s collapse, Coomber told Accountancy Age the £4.2m loan secured
from the bank dried up, causing the site’s development to grind to a halt.

An LPA receiver takes charge of a mortgaged property when the loan is in
default, usually with a view to sale or to collect rental income for the lender.

LPA appointments are common in the case of failure of a property developer,
whose borrowings will largely be secured on specific properties.

The pair faced a £1.4m bill in personal guarantees on the loan, Coomber told
Accountancy Age.

Coomber and Burrus objected to the appointment of property insolvency
specialists Edward Symmons as a Law of Property Act receiver because it was
Kaupthing’s failure that had plunged them into financial trouble.

The pair are claiming damages for ‘missed opportunity’ and ‘loss of future
earnings’ and ‘nine months of wasted work’ on the site, according to the writ.

In a statement the firm said: ‘Ernst & Young strongly refute and will
vigorously defend the claims made by Mr Chris Coomber and Dawn Burrus of
Greystone Houses Ltd and C2H Ltd.

‘There is not a shred of truth in the allegations, which are seriously
defamatory to the firm and the joint administrators of Kaupthing Singer &
Friedlander.

‘Ernst & Young and the individuals at Ernst & Young against whom the
allegations have been made have issued defamation proceedings against Chris
Coomber and C2H Limited.’

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