The former company secretary of failed Midlands-based intermediary Motor & Home is set to sue the company's banker's Lloyds TSB for £3.5m.
Jim Quinn said he had decided to bring the action, following six months of negotiations with Lloyds TSB which had failed to reach a conclusion. Quinn said he had been offered a without prejudice offer from the bank, which was not satisfactory.
Quinn believes it was the actions of the bank that led to the company having to be sold.
Motor & Home was taken over by Net Windfall after the company got into difficulties in May this year. It is believed Motor & Home owed its major creditors Holman and HSBC more than £1m.
At the time of the take-over questions were asked as to how Motor & Home had managed to build up £1m of debts.
Quinn said the company's trouble started when Lloyds TSB returned £80,000 worth of cheques even though Motor & Home had the funds to pay them.
This led to other companies questioning the financial state of the company. “On the whole, the industry is fairly nervous,” Quinn commented.
“The company's reputation was damaged in the marketplace,” Quinn said. And when some companies tried to express-clear cheques they failed to clear.
An attempt to change banks was then hampered by Lloyds TSB's failure to transfer the company's accounts to the new bank.
Quinn said the bank admitted the problem: “At an early meeting at local director level, a full and unreserved apology was made for its actions by the bank.”
But Quinn said six months down the line Lloyds TSB had not met his claims and the only option left to him was to take legal action.
In a statement, the bank said: “Lloyds TSB is aware of the matter raised by Mr Quinn and has looked into it.
“The bank has tried to resolve the situation amicably and offered a one off payment as a goodwill gesture.
“However, due to the possibility that litigation may be pending it would be inappropriate to comment further at this stage.”
Quinn is being represented by solicitors Dibb Lupton.
