Investment company sues E&Y
Duke Street Capital, the private equity investment company, is suing Ernst & Young over its alleged failure to spot problems at collapsed plastics business Steiner Industries.
The venture capitalists claim the firm, which acted as auditors of Steiner Industries, should have spotted alleged problems at the manufacturer before Duke Street purchased a 66% stake in the business for Pounds 35m in 1999.
Soon after the purchase, Steiner industries collapsed with debts of Pounds 200m.
According to reports on ThisIsLondon.co.uk, Duke Street is suing E&Y for Pounds 55m, the cost of its investment plus Pounds 20m which co-investors lost.
A spokesperson for Duke Street confirmed the lawsuit against E&Y, but said the amount of Pounds 55m may not be accurate. She also denied reports that Duke Street was also suing rival Big Five firm PricewaterhouseCoopers, which carried out a series of due diligence checks on the Austrian company.
Receivers are currently trying to sell Duke Street’s two operating companies, which make garden furniture and a plastic packaging. But even if they succeed in finding buyers, the company’s bankers will be first in line to receive any of the proceeds.
A spokesperson for E&Y was asked to comment on the matter, but has yet to respond.
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