Northern Rock Shareholders

I really don\’t think these people have a chance:

Last month Alistair Darling rejected two private sector bids for the bank in favour of nationalisation. Payouts for shareholders were to be determined by an "independent valuer" who would begin the process following a debate in parliament, expected to be after the Easter recess.

Lawson said a fair assessment would put the shares at book value – the assets minus the liabilities – of about £1.5bn, or £4 a share. Six months before the crash the bank was valued at more than £5bn.

He said the valuation process would strip shareholders of their property, which was a breach of article 1 of the Human Rights Act on rights to property.

"In our view the UK government has confiscated the shares even though there was a good private sector solution on the table that would have enabled the company to recover and repay the debts owed to the Bank of England.

"They have promised to pay some compensation but have rigged the basis of the valuation of the shares so that shareholders are likely to get very little or nothing."

Crock was bust without the guarantees.

However, I wouldn\’t put it past the recent flood of legislation to have provided a pretext for them to get more than th about 5p per share that\’s likely to be on offer.

So, umm, maybe they do have a chance, but it\’s not one that they ought to have perhaps.

2 thoughts on “Northern Rock Shareholders”

  1. There are two meanings to “bust”: (1) insolvent, and (2) net assets of below zero. The Crock was (1).

    It remains to be seen whether it was (2) as well, but there are several values kicking around that indicate a non-trivial price per share. It will be up to a court to decide if the valuation is fair. I’m guessing, since the Government is involved, it won’t be fair.

    “maybe they do have a chance, but it’s not one that they ought to have perhaps.”

    Fine libertarian-property-rights man you make. Sure, let’s just take someone’s assets for nothing because it proves inconvenient to let nature take its course.

    It’s possible to be “bust” (insolvent) and have something left when it’s all wound up. A friend of mine was appointed to wind up a pig farmer years ago. The farmer walked away with a ton of cash from the sale of his farm. Would you have taken the net cash from the man’s farm because he should suffer extra punishment from going “bust”?

    More important, why is it so hard for people to understand basic accounting?

  2. “More important, why is it so hard for people to understand basic accounting?”

    With 125% mortgages on offer by Northern Wreck prior to its nationalisation, that is certainly a question that ought to be put to its illustrious management.

    Btw do watch this illuminating discussion on Newsnight about NW and 125% mortgages between Yvette Cooper (Chief Secretary to HMT) and Philip Hammond (Shadow Minister):
    http://youtube.com/watch?v=Z1cxZOjeCX0&feature=related%20-%2058k

    Perhaps Yvette Cooper’s best excuse is that she represents a Yorkshire constituency.

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