After weeks of threats it looks as if the Government is finally going to be sued over its handling of the Northern Rock fiasco.
Edwin Coe stalwart David Greene, who famously represented a group of Railtrack shareholders in its failed bid for government compensation, has written to the Treasury asking it to reconsider the terms of the Banking (Special Provisions) Bill. If it doesn’t, the shareholders will sue. The issue with the bill is that it allows Northern Rock to be viewed as a company in administration for calculating compensation packages, effectively meaning shareholders are in line to receive pretty much nothing.
This is clearly bad news for the hundreds of pensioners who were sitting on huge gains after being handed shares on Northern Rock’s demutualisation.
Sympathy for the Rock’s hedge fund investors is less obvious, but this hasn’t stopped them also preparing for action against the Government, with White & Case partner John Reynolds representing SRM Global, while Nabarro‘s Ian Binnie is acting for RAB Capital. If it wasn’t for the smaller shareholders, you could almost pity the Government.