DTI may probe Derbys due diligence claims

The Derby Cycle Corporations deal with Lenark Ltd is to be investigated by the government. Trade secretary Stephen Byers said he would take a personal interest in the collapse of Sturmey Archer.
Author:
Publish date:
Social count:
0

[Uploaded to BikeBiz.co.uk on 27th September]

Thanks to the press coverage of the Derby/Lenark deal, Nottingham MPs Alan Simpson and Graham Allen have asked the government to investigate.

Trade secretary Stephen Byers has responded quickly: "It is only right that I should investigate to see what the situation is. I will see what, if anything, we can do."

Alan Simpson MP is clamouring for a full Department of Trade & Industry inquiry.

In a dig against Derby, he said: I want to know how Lenark, a company with a poor credit rating, was able to pass the due diligence test to buy Sturmey Archer.

He is demanding to know what Derby knew about Lenark before the deal went though on 1st July.

This increases the pressure on Derbys US-based MD Gary Matthews. BikeBiz has said Derby ought to come clean sooner rather than later on exactly what it knew about Lenark.

If Derbys legal advisors who conducted the due diligence, discovered Lenarks apparently less than favourable past (something you can find out in 10 minutes by doing an internet credit search) then Derby needs to explain why it went ahead with the deal.

If Derby's advisors didnt dig up Lenarks poor credit record, which is unlikely, Derby needs to reveal whether they will be suing their advisors for negligence.

One of the ways Derby could extricate itself from its predicament is buying back Sturmey either before or at Mondays creditors meeting. This would involve re-absorbing Sturmeys £5m moving costs and redundancy payments.

Featured Jobs