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Debt purchasing arm of Cattles unveils £5m losses
Tuesday 18th May 2010The increasingly complicated saga of subprime lender Cattles continues, with the announcement that its debt purchasing subsidiary has revealed pre-tax losses of nearly £5.2 million.
As reported on www.credittoday.co.uk, The Lewis Group has only just published its 2008 results, after a major error was discovered in the accounts of Welcome Finance, another subsidiary of Cattles.
This error resulted in a £700 million black hole in Welcome Finance’s accounts, and led to even more consternation for the embittered subprime lender, which was hit hard during the credit crisis.
Following the discovery of the accounting error, a forensic review had to be carried out on the company’s books, which delayed the results for The Lewis Group being published.
The losses of almost £5.2 million are in contrast to the healthy £10.2 million pre-tax profit the group made during the previous year; however the figure looks almost modest when compared to the colossal losses of £745.2 million suffered by Cattles.
When the accounting error came to light, a number of former executives were dismissed, whilst hundreds of staff were made redundant.
The Lewis Group has put its own losses down to a reduction in cash collections, and the collapse in the housing market causing a devaluation of many of its debt portfolios.
Cattles has now stopped any further lending by Welcome Finance, and is using The Lewis Group to collect out the loan book, which is predicted to take at least two or three years.
The group is set to report its postponed results for 2009 in the next few weeks, with Cattles chairman Margaret Young telling shareholders: “Many of you have lost money that you have told me you could ill afford to lose. These facts make it all the more painful for me to present this annual report.
“I share your anger about what has happened. Like you, I feel very let down by certain former executives. I also share your frustration about the time that it is taking to establish responsibility for the problems which we have experienced.”
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