Evidence for the genesis of the rescue culture - a two pipe problem?
In a fairly recent article (Tribe, J. Company Voluntary Arrangements and Rescue: A New Hope and a Tudor Orthodoxy (2009) J.B.L, 5, 454-487) I have argued, inter alia, that the rescue culture can be traced to Mr Kenneth Cork's (as he then was) actions in relation to the Stern Empire in the early 1970s. I have recently chanced across an article (John Plender - ‘Shoring up a rickety property market', Daily Telegraph??, 18/09/74) that supports that contention further. The article makes essential reading for all those interested in corporate rescue and the formulation of ideas that eventually saw fruit in the Cork Report. The Plender piece is of particular interest as the author explains how Mr Kenneth Cork (later of course Sir Kenneth) undertook the gradual sell off of property owned by companies in the Stern group, namely, the Lyon Group and Guardian Properties (Holdings). Plender notes:
"Equally important is the role played by Mr Kenneth Cork, the City accountant who is unwinding the three well-known property groups...so far he has been notably successful in persuading the different classes of creditors in the Stern Empire...that a programme of orderly sales of property offers the best solution to everyone's problems."
The banks were owed some £2,400m by the property group. The essential balance in the case that Cork had to strike was between the banks cutting their losses and running, with the devastation that would cause to property prices generally, and obtaining the best financial result possible. He successfully steered the second path by trading the viable parts of the group and the seeds of the rescue culture were born.
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...