Director in court deal after row over £3m payments

They were seeking to recover £3 million dividends declared by Simclar Ayrshire in June 2006, months before Mr Russell closed the business which had plants in Irvine and Kilwinning in 2007.

The liquidators challenged the lawfulness of the dividends that were paid to the parent Simclar Group, which has headquarters in Dunfermline.

Mr Russell sparked fresh controversy in June last year when he put Simclar Group into administration. This was followed by the loss of 138 jobs in Dunfermline..

Last month 104 former employees at the Dunfermline plant were awarded payouts totalling around £1.1m by an employment tribunal after the union Community claimed they had been unfairly dismissed.

The actions of Mr Russell and two other former directors of Simclar Ayrshire regarding the payment of the £3m dividends were due to come under scrutiny in the Court of Session in Edinburgh this month.

After more than two years of procedural debate regarding the civil case launched by the liquidators Lord Hodge had set aside 10 days for a Proof Before Answer in which the issues would be considered in court.

Mr Russell and the other former directors were likely to have been questioned by the counsel for the pursuers, Richard Keen, QC.

The legal teams gathered at the Court of Session on Tuesday but after Mr Keen said the pursuers had reached an agreement with the directors, the hearing was adjourned.

A spokesperson for the Scottish Court Service said the Proof Before Answer was discharged as a settlement had been reached. The spokesperson said the court had not made an order.

The court does not have details of the agreement.

Given the costs involved in pursuing the action, it seems unlikely the liquidators to Simclar Ayrshire would have accepted a settlement that did not involve money being paid.

The settlement proceeds net of expenses may increase the amount available for payment to creditors of Simclar Ayrshire.

Assuming it holds, the agreement will bring down the curtain on a drama which has sparked anger and sadness in Scotland.

Four years ago The Herald revealed Simclar Group had paid "technically unlawful" £200,000 dividends back in 2006. Mr Russell's 90% shareholding would have entitled him to £180,000. His wife Christine's 10% holding qualified her for £20,000.

In a note to the group's 2006 accounts, Simclar Group admitted the payments were made by the holding company although that company had accumulated historic losses

Now aged 67, Mr Russell was a poster boy for the Scottish electronics industry during the boom years of the last century.

After starting Simclar in his garage in Fife in 1976 he grew the company into a global business with operations in the United States, Mexico and China.

The company employed more than 1000 people in Scotland in its heyday.

Mr Russell put Simclar Group into administration following delays in launching a "Green plug" it was working on.

Recent filings by the administrators from Deloitte showed they sold the remnants of the UK operation for just £134,000.The liquidators of Simclar Ayrshire launched a commercial action against Simclar Group, Sam Russell, John Ian Durie and Stephen Donnelly.

At last week's hearing Lord Hodge allowed the claim against Simclar Group to continue.

Upon being appointed administrators to Simclar Group, Deloitte chose not to spend money defending the action being taken against the company as they believed it was not in the best interest of the creditors.

In the company's accounts for 2009, filed in December 2010, Simclar Group said: "The company and certain of its directors are the subject of a claim by the liquidators of ... Simclar (Ayrshire). The claim is being defended vigorously."

Mr Russell declined to comment when contacted by The Herald.