Audit – Coopers faces Barings battle

Barings auditor Coopers & Lybrand faces further litigation after creditors of the crashed investment bank rejected compensation proposals last week.

Holders of bonds in the bank voted against implementation of an #84m compensation plan worked out over the last two years between the City Disputes Panel and liquidators Ernst & Young.

The plan would have lead to the settlement of all outstanding litigation involving Barings and its subsidiaries, including action against Coopers, now part of PricewaterhouseCoopers.

A large share of this would have come from Coopers, auditor of Barings in 1994, the year that Nick Leeson’s rogue trading activities brought down the bank.

Deloitte & Touche, auditor of Barings Singapore subsidiary BFS in 1993, would also have contributed, as would the ING Group, which bought Barings after the collapse. About 30 Barings group directors are also understood to have made contributions.

Accountancy Age understands that joint liquidators Maggie Mills, Alan Bloom and Nigel Hamilton refused to recommend the deal but put it forward on a ‘without prejudice’ basis.

An Ernst & Young spokesman said: ‘Given the rejection of the conciliation plan, the liquidators will recommence the litigation against the auditors.’

He added: ‘The ultimate outcome of the liquidation will not be known for some while.’

Last week’s meeting involved holders of $150m floating rate notes issued in 1986 by Barings.

The conciliation plan was initially put forward in July to holders of these notes as well as to holders of #100m perpetual subordinated notes issued by Barings in 1994. Holders of the perpetual notes agreed to the conciliation plan.

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