24 September 2009

Titles that covered this article include The Daily Telegraph, 23 Septamber 2009.

One of Britain’s longest-running insolvency cases has been concluded more than 35 years after it was caused by the last banking crisis, according to the liquidators, UHY Hacker Young, the national accountancy group.

UHY Hacker Young were appointed liquidators to Apal, a tour operator that went bust in 1974 following the collapse of Israel-British Bank. UHY Hacker Young paid the last of seven dividends in August 2009 to over 500 creditors, which included holidaymakers, airlines and hotels. The first dividend was paid in the 70’s and the last just recently. Each creditor received 74p for every £1 lost – a very high rate for an insolvency case.

According to UHY Hacker Young, Apal was a major depositor, during the peak travel season of its holiday makers and before it could pay its suppliers, with Israel-British bank, and went into liquidation as a result of the bank’s failure, leaving hundreds of British holidaymakers out of pocket.

UHY Hacker Young says that the collapse of Israel-British Bank in January 1974 has many parallels with the current economic crisis. The bank collapsed as the result of bad loans and came as Britain was in the depths of one of the deepest recessions since the Second World War.

According to UHY Hacker Young, the reason why the case took so long to resolve was that Israel-British bank had made complex loans to third parties, and many irregularities were uncovered after the bank collapsed, resulting in a lengthy series of legal actions, including criminal proceedings outside the UK.

Ladislav Hornan, the sole surviving liquidator of Apal and now the Managing Partner of UHY Hacker Young, worked on the Apal case from his days in the firm as an administrator. During the 35-year bankruptcy, over 20 other staff at UHY Hacker Young assisted him on the case, which generated over 300 lever arch files of documents.

Ladislav Hornan, Managing Partner of UHY Hacker Young, comments: “This insolvency shows that when a bank fails with significant assets overseas and there are irregularities the process of getting the creditors’ money back can be complex and lengthy. When you think of the greater complexity of the modern banking system, creditors could be much worse off if a similar situation happened today. 35 years is a long time to wait for your money!”

He adds: “It is a relief to finally close the book on this case. It’s particularly satisfying that the creditors got back three quarters of the money they originally lost, which is a very good result for an insolvency despite the passage of time.”

PricewaterhouseCoopers (PWC) acted as liquidators of the Israel-British Bank. The firm was known at the time as Cork Gully. Sir Kenneth Cork, a founding Partner of the firm, later became Lord Mayor of London, and was responsible for the Cork Report, published in 1982, much of which became the basis of current insolvency law in the UK.

Ladislav Hornan