Chris and his wife Claire ran a thriving restaurant business and employed 15 people. Following a proposal put forward by the company’s accounts to its bank, the Natwest Bank insisted that Arthur Andersen should undertake a review of the company’s financial position. Arthur Andersen reported to the bank, but the company had to pay the fee of £3,000 plus VAT, an amount which resulted in a further increase in the company’s overdraft. Few days later, the report from Arthur Andersen recommended that the company be placed into receivership. Arthur Andersen now returned as receivers. Were there any conflicts of interests?
Chris and Claire were initially retained as restaurant managers but were soon sacked by the receiver. Other staff was also reduced and an unqualified chef was appointed. The receivers brought in a management company to run the restaurants, but they were unable to match the previous high quality of food and service delivered by its owners. The business reputation and financial position declined. At one stage, the local Environmental and Health Officers threatened to close the restaurant on account of lack of cleanliness and rubbish strewn floors. After just 12 weeks, a business developed over a 12 year period was liquidated. Despite various legal battles, Chris and Clare have lost their home and savings. They cannot appeal to any independent ombudsman to review the conduct of their insolvency.