No compensation for Northern Rock shareholders
Former Northern Rock shareholders are not owed any compensation, the Upper Tribunal held last week.
After the failing bank was nationalised and its shares taken into public ownership in February 2008, the government set up a scheme to determine whether any compensation was due to shareholders. An independent valuer, Andrew Caldwell, assessed the shares as worthless if government assistance—£27bn in loans and £29bn in guarantees—were to be withdrawn.
A group of shareholders, led by hedge fund Harbinger Capital Partners, challenged the premise of the assessment, arguing it should have assumed a demand for repayment was made before nationalisation. The dispute centred on the correct interpretation of the valuation assumption in the Banking (Special Provisions) Act 2008, s 5(4)(a) that financial assistance from the Bank of England and the Treasury “has been withdrawn”.
However, the Upper Tribunal held the valuer’s interpretation was correct and that the nil valuation should stand, in Northern Rock Shareholders v Andrew Caldwell and HM Treasury [2011] UKUT 408 (TCC).
