Ailing lender Cattles is suing its former accountants PricewaterhouseCoopers (PwC) for alleged negligence in the way it audited the company’s 2006 and 2007 financial statements.
A legal claim was commenced by Cattles in the High Court in London yesterday (5 February), asserting that PwC’s alleged negligence meant the financial position of the Group was “fundamentally mis-stated”.
Cattles nearly collapsed in 2009 with almost all the value of its shares wiped out after a black hole was discovered in its accounts.
The sub-prime lender said the audit failure meant it continued to lend money and incur liabilities of £1.6 billion in the following two-year period.
In a statement, Cattles added that a proper audit of the impairment provisions in particular would have revealed that the business was not financially viable.
A spokesperson for the firm said: “It is clear to us that PwC were negligent in their role as auditors. As a consequence, Cattles and its creditors suffered very significant losses.
“It is therefore in the best interests of the creditors of Cattles that this claim is properly pursued to enable creditors to be appropriately and fairly compensated.”
PwC said it was disappointed the claim had been brought given the Financial Services Authority has censured Cattles for market abuse, and concluded that certain directors of the business acted without integrity.
In a statement the firm said: “This is an inflated and misguided claim and, as we have made clear before, we will vigorously defend our work.”