Northern Rock shareholders lose appeal case
The band of Northern Rock shareholders who took the UK government to court demanding compensation for their shares have today lost the first stage of their appeal against a recent ruling which backed the government's stance. The situation revolves around the financial health of Northern Rock before and after it was placed into administration by the UK government.
The UK government is set to base any compensation claims as if the business was insolvent and effectively closed while a number of shareholders, some of them very prominent in the city, believe the business was still a going concern even when the UK government stepped in. The situation seems set to move on to the next stage with the band of shareholders threatening to take it all of the way to the European Court of Human Rights.
While the UK government was effectively forced to act very quickly when Northern Rock started to wobble, with the potential to impact upon the overall financial sector, it is the speed at which these moves took place and the lack of communication with prominent shareholders in Northern Rock which is causing the problem. Those looking for compensation from the UK government believe the business was worth in excess of four pounds a share while the authorities believe the value of shares in Northern Rock at the time it was taken over by the government was no more than 5p.
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