LITIGATION - PW's Facia claim thrown out

Price Waterhouse, administrators for the collapsed retail group Facia, was dealt a critical blow in the High Court last week. A senior judge dismissed the firm’s bid to recover more than u10m from two of Facia’s former directors as ‘unjustified and oppressive’.

Vice chancellor Sir Richard Scott threw out a claim by the firm for a summary judgment against former Facia chairman Stephen Hinchliffe and director Christopher Harrison, clearing them of allegations of misconduct during the company’s collapse last year.

Sir Richard supported the claims by Hinchliffe that he had acted in the best interest of Facia’s creditors by allowing it to continue trading, despite severe financial problems. ‘I regard it as a great pity that the application was brought to a hearing,’ he said.

The problems began for the Facia Group back in 1995 when it took over Freeman Hardy Willis, the shoe chain owned by Sears. Facia was forced into administration by Sears last year, sparking an investigation by the Serious Fraud Office.

PW claimed that the directors were in breach of their duties for making payments from Facia Footwear to other parts of the group. The firm maintained that the directors should have been aware that there was no realistic expectation that the money would ever be repaid.

Sir Richard dismissed the claim, ruling that the creditors’ only chance of being paid in full relied on a continuation of trading.