1991 Maxwell business empire faces bankruptcy

Administrators have been called in to try to salvage the Maxwell business empire, which is at least £1bn in debt.

At 1100 GMT two sons of the late business tycoon Robert Maxwell, Kevin and Ian, called in administrators from accountants Arthur Andersen as the enormity of their father’s financial difficulties emerged.

Mirror Group Newspapers (MGN) today revealed Mr Maxwell, who died a month ago, removed £350m from its pension fund in the weeks before his death apparently without proper authority.

Administrators will take over Headington Investments and Robert Maxwell Group, the senior UK companies at the heart of his business empire.

They head a network of 400 private firms including AGB International, The European Newspaper and The New York Daily News.

Through the two key companies the Maxwells own 51% of MGN.

The family also owns 68% of Maxwell Communication Corporation (MCC).

Administrators have three months to prepare a disposal plan for approval by banks and other creditors.

Joint administrator John Talbot said: “We are looking at a strategy where by we maintain the businesses which are good and viable and at the moment we are looking to sell those.”

Some analysts predict the Maxwell business empire could be sold off by the spring, saying there is almost no question of a rescue.

Maxwell’s private companies could be worth £1bn but the debts total £1.4bn.

MGN is valued at £500m at its suspended share price but in an auction it could fetch much more.

But it has debts of £350m and faces questions about the millions of pounds missing from its pension fund.

The other publicly quoted company, MCC, is worth £227m at its last share price, but like the private companies its debts total £1.4bn.

It was the Swiss Bank which triggered the crisis when it called in the Serious Fraud Office and put a receiver into a subsidiary of Headington Investments.

The bank had discovered the security the bank was owed had been sold – contravening the loan agreement.

Courtesy BBC News

In context

Two inspectors from the Department of Trade and Industry were commissioned in 1992 to look into the collapse of the Maxwell business empire.

Its report was delayed as Maxwell’s two sons and family adviser Larry Trachtenberg were charged with being involved in a conspiracy to defraud company pensioners, after £440m was taken by their father from his companies’ pensions.

All three were later acquitted in 1996 on all counts after an eight month trial.

The DTI inquiry resumed and its report, published in March 2001, blamed Kevin Maxwell for having a “heavy responsibility” for the collapse of his father’s business empire.

It also blamed leading City institutions and Robert Maxwell himself.