Resort shareholders win £5m after long compensation battle

Shareholders who lost out when Resort Hotels collapsed in 1994 have won £5m in compensation, it has emerged.

The group of 244 shareholders battled for seven years to win the out-of-court settlement from Resort's accountants, Coopers & Lybrand (now part of PricewaterhouseCoopers).

The Resort Hotels Shareholders' Action Group won £5m plus costs in April after claiming professional negligence.

It revealed the figure last week after announcing the action group had been dissolved.

The dispute began in 1992 when Resort Hotels used forged documents and false financial statements to accompany a rights issue of £20.6m in new shares.

Some 6,000 small investors were misled and subsequently lost their investments when the company collapsed in June 1994 with debts of £140m.

The only compensation offered to Resort's shareholders at the time was a £250 voucher to spend at Jarvis Hotels, which had bought most of Resort's portfolio.

Resort's managing director Robert Feld was found guilty of fraud in 1997 and sentenced to eight years' imprisonment.

John Bancroft, chairman of the action group, said: "The small shareholder is always at a significant disadvantage to the institutions of the City who have sources of information and influence not open to the individual.

"This successful result shows that with determination and dedication the small shareholder can achieve recompense against professional advisers for their negligence."

PricewaterhouseCoopers declined to comment.