Barings audit settlement faces hurdles.

Failure of Barings’ creditors to reach a majority agreement could undo the settlement deal reached between its liquidators and Coopers & Lybrand, the collapsed bank’s main auditor, it emerged this week.

The last-ditch out-of-court deal brokered by lawyers last week for liquidators at KPMG and Coopers, now PricewaterhouseCoopers, must overcome several potential obstacles before it is finalised.

Richard Heis, liquidator at KPMG, told Accountancy Age this week: ‘There are two hurdles. Every class of creditor, secured or subordinate, needs to agree the scheme.’

For the deal to go ahead 75% of creditors with the biggest stake, and 50% of the number of creditors must give their agreement.

If either 1986 noteholders or holders of the perpetual notes, both major groups of creditors, are unhappy with the deal and succeed in getting the other smaller groups of creditors on side the deal could be thrown out.

The value of the latest proposed deal has not yet been disclosed.

It is understood the last deal brokered in June failed due to demands by the 1986 noteholders – in this case, vulture funds – for a higher settlement figure.

Another key issue is when the case against Deloitte & Touche, co-auditor of Barings’ Singapore subsidiary, would begin.

The case against Deloittes will not be able to begin until the settlement deal is sanctioned by the High Court, and that could take up to eight weeks. This also means that the case would not continue until early next year.

Another possible hurdle is whether the creditors wish to continue funding a case which has already exceeded #100m in legal fees.

More details will emerge following a case management conference due to start on Monday, 22 October.

Analysis – Battle of Barings rages on Practice/1125622.

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