MP calls on Davenham to drop bankruptcy case

AN MP has spoken out in the House of Commons over a move by Manchester-based lender Davenham to bankrupt one of his constituents.

Gareth Thomas, the Labour Member of Parliament for Harrow West, has said that if a bankruptcy petition due to be heard in the High Court this morning against company director Mark White is successful, it could jeopardise another of his businesses that employs 200 people in the construction industry.

Mr White and his business partner Seamus Finnerty had taken out bridging loans worth £1.7m from Davenham on two properties in London in late 2007 through their joint venture company, St George’s Property Service London Ltd.

They were meant as a short-term source of finance and attracted high rates of interest, but the ensuing property market crash made them difficult to sell or refinance. The pair  refinanced one property and repaid Davenham almost £1.2m but struggled to refinance the second loan so Davenham appointed insolvency firm MCR as administrators to the business in September 2009.

Davenham has since sought to enforce personal guarantees against both directors.

Mr Thomas has argued that Davenham should drop its petition against Mr White. He said that Mr White has already repaid £2.2m against the initial sum of £1.7m that was loaned to the business, but acknowledged that this “is not the full sum that Davenham is demanding”. It is understood that Mr White owed Davenham a further £1m.

Mr Thomas said that he had written to Business Secretary Vince Cable to raise concerns about aspects of the case. He also said that he had attempted a meeting with Davenham’s main lender Royal Bank of Scotland to get it to intervene, but to no avail. He has called on the Treasury to demand that the taxpayer-owned bank answers four questions about its relationship with Davenham.

“What knowledge of Davenham’s financial problems has it had; how involved has it been in the effort to keep Davenham afloat; what knowledge has it had of efforts to replace Davenham’s board; and finally, what knowledge and scrutiny of Davenham’s business strategy did it have before granting it extended facilities earlier this year?

Mr Thomas added: “Bankruptcy would not only mean my constituent losing his home, a bad enough outcome and traumatic for him and his family, but would put at risk a separate company with 200 employees.”

A spokeswoman for Davenham said that contractual confidentiality obligations prevent it from discussing the details of this particular case.

However, she added: “Davenham continues to operate a policy of working with clients who default on their loans and will endeavour to reach agreement with those clients who are genuinely engaging with it to find an appropriate, out-of-court solution.

“In cases where an appropriate settlement cannot be reached, Davenham is left with no alternative but to seek formal proceedings as a matter of last resort, thus relying on the legal system to implement, and judge where necessary, such cases.”