Sunday 11 August 2019 7:17 pm

Deloitte sued for £20m over collapse of storage firm

Deloitte will allow staff total flexibility over where they work post-pandemic.

A Yorkshire-based businessman is suing big four accountant Deloitte and international law firm Clyde & Co over allegations that Barclays bank exerted “informal control” over the financial giants during the winding down of his firm.

Jason Schofield, a businessman who ran Leeds’ based storage firm Rhino Enterprises, is suing two joint administrators at Deloitte and its legal adviser for about £20m over allegations they failed to act independently in the administration process.

Schofield claims his business collapsed into administration after he was mis-sold an interest rate hedging product by Barclays bank in 2008. He later settled the case with the bank.

IRHPs are supposed to allow clients to manage fluctuations in interest rates. In 2012, the financial watchdog found there to be “serious failings” in the sale of IRHPs to small businesses who were unlikely to have understood their risks.

Schofield claims he encouraged Deloitte, the administrator, to pursue legal action against Barclays to recover the lost money, but that it failed to do so because of the close professional relationship it enjoyed with the bank on its preferred panel for insolvency work.

The claim form, seen by City A.M., argues that insolvency practitioners working for Deloitte are “highly motivated to build and maintain a close relationship” with the bank through various means, including the negotiation of lower fees in return for repeat work and the granting of secondments to Deloitte employees.

“Consequently, the strong informal control that Barclays has over Deloitte’s insolvency practitioners allows them to effectively influence their actions throughout their involvement as administrators,” the claim said.

“The informal control is such that, where they are appointed administrators over a company with a serious and substantial claim against Barclays, members of Deloitte were either contracted not to litigate against Barclays or could not pursue the same without fear or favour and/or with the independence required,” it added.

During the administration process Deloitte appointed Clyde & Co to assess the merits of the mis-selling claim. Schofield’s firms claim the law firm was conflicted in its relationship with Barclays, having advised it on a $111m (£92m) bank loan facility to Enstar, a Bermuda-based insurance provider.

Schofield’s companies also accuse Clydes of passing on to Barclays its view that his mis-selling claim was without merit, in a breach of legal privilege.

A spokesperson for Clydes said: “We are aware of the complaint, consider it to be without foundation and refute the assertions in their entirety. It would be inappropriate to comment further at this time.”

Deloitte declined to comment. Rhino Enterprises declined to comment.