A CLYDESDALE director yesterday denied that the board tried to hide

the true state of financial affairs at Scotland's largest electrical

group shortly before it collapsed with the loss of 850 jobs and

Loading article content

creditors owed around #80m.

Craig Murray, a director of the Clydesdale Group and company secretary

of Clydesdale Electrical Stores, confirmed that the 1993 accounts were

never filed.

But he insisted there was no breach of company law because an

extension to the December 3 deadline for filing the accounts -- which

would have shown mounting losses -- had been granted by Companies House.

Mr Murray said the only reason for not filing the accounts was that

the audit had not been concluded.

Facing questions from the floor at the first meeting of creditors, he

also denied that management had overvalued stock in last year's aborted

bid to raise #40m during an attempted flotation on the Stock Exchange.

But he confirmed there had been an approach by an interested party to

buy the business soon after the aborted flotation. Herald sources say

that offer was not only worth #39m but could well have guaranteed

Clydesdale's future -- and even brought immediate growth.

However, Mr Murray was adamant that shareholders were not informed

about it because nothing had been put in writing and it was revocable.

Clydesdale went into receivership in January after a dramatic

eleventh-hour appeal to its banks and investment institutions for a #4m

lifeline to secure its immediate future was turned down.

That rebuff subsequently led to liquidation. Some 2500 unsecured

creditors can now expect to receive just 20p to 30p in the pound, and

some 17,500 customers may lose out on claims from money-back schemes

operated by Clydesdale.

Major unsecured creditors include suppliers such as Sanyo, Phillips,

Mitsubishi, and Sony, who are owed #30m according to joint liquidators

Roger Powdrill and Ralph Preece, of Touche Ross.

Secured creditors, including the Bank of Scotland, the Royal Bank of

Scotland, Barclays, and NM Rothschild and Sons, will recover the near

#35m.

The receivership costs alone are estimated at #3.3m. When liquidation

fees are added, the total will be well above that which the Clydesdale

management claimed would have been sufficient to keep the group in

business.

However, the 150-strong audience at the meeting in the Glasgow Royal

Concert Hall appeared little interested in the reasons behind the

Clydesdale Group's liquidation or its effects on many businesses owed

money.

Instead, most questions involved the money-back promotions under which

customers who bought goods were guaranteed to receive their money back

eight years later.

Mr Powdrill confirmed that just one of the three schemes is covered by

an insurance policy.

The 17,500 people in the refund scheme are being treated as contingent

creditors because their claims against Clydesdale do not become

effective until 1998 or 1999.

The liquidators are determined unsecured creditors should not have to

wait that long before receiving any dividends from recent sales of

assets. It is likely they will ask the Court of Session to clarify the

legal position.

One option being considered is to have some of the creditors' purse

ring-fenced for customers who become genuine creditors in 1998 and 1999.

The pay-out could amount to #6.5m -- but no-one yet knows if the

insolvency means that their claims will automatically fall.

The contingency creditors have been advised to investigate their

rights as a third party and seek legal advice.

Melvin Mannion, one of the creditors at the meeting, said later he was

owed #19,000.

Mr Mannion, managing director of a company which installed satellite

dishes for Clydesdale customers in Manchester, Stockport, Bolton,

Preston and Stoke, said he has had to lay off four of his eight staff.

Alexander Barr Screenprint, of Finnieston, Glasgow -- owed #58,000 --

said it faces going out of business, with the loss of 10 jobs.

Mr Powdrill said he will be considering the possibility that the

Clydesdale Group could have been saved by a #4m injection by the banks,

but added: ''Even the directors concede that would not have solved

problems in the short-term and would have provided only some relief.''