Julia Irvine 12 Aug 2019 04:46pm

Deloitte in £20m lawsuit over Rhino administration

Deloitte is facing a £20m law suit from a Yorkshire businessman who claims that the Big Four firm was unfairly influenced by Barclays Bank when it acted as administrator to his business

Jason Schofield, whose storage company Rhino Enterprises was put into administration by the bank after a disagreement over an interest rate hedging product (IRHP) – which he claims the bank mis-sold to the business – is also suing law firm Clyde & Co. It acted as advisers to the administrators, Clare Boardman and Matt Smith, who are based in Deloitte’s Leeds office.

According to a report in City AM, Schofield argues in the statement of claim that insolvency practitioners at Deloitte are “highly motivated to build and maintain a close relationship” with the bank. Methods include agreeing lower fees in return for repeat work and secondments for Deloitte staff.

“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 states.

“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.”

The City AM report also reveals that the administrators commissioned Clyde & Co to evaluate the company’s mis-selling claim. Schofield alleges the lawyers were conflicted because they had advised Barclays on a multi-million pound loan facility for a Bermuda-based insurance company.

He also accuses them of breaching confidentiality by telling the bank that the IRHP claim was without merit, even though the Financial Services Authority (now the Financial Conduct Authority) had found that banks, including Barclays, had seriously failed their SME customers by selling such risky products to them.

In 2015, two years after Rhino went into administration, Schofield took back what was left of the business and promptly sued Barclays for £50m. The bank settled before the case came to court.

Deloitte said it would not be commenting on the current claim.