Hearts shareholder calls in liquidators

HEARTS shareholder Robert McGrail has been forced to call in liquidators to his failing mortgage advice business.

Auditors KPMG were today checking assets and balance sheets at the Mortgage Advisory Centre in Walker Street.

The 50-year-old businessman, who is believed to be a director of 24 companies, including the First Mortgage chain, holds a ten per cent share in Hearts.

Mr McGrail refused to comment. However, an answerphone message at the Advisory Mortgage Centre said: "On July 18 Blair Nimmo, of KPMG, was appointed liquidator for the Mortgage Advisory Centre."

Today KPMG revealed that the Edinburgh-based business, which has been operating as a mortgage and insurance broker since 1983, has been receiving an increasing number of claims as a result of sales of endowment policies stretching back to the 1980s.

According to KPMG, these claims have now reached a level where the company is unable to meet them from its own resources.

Mr Nimmo said "We are currently liaising with the Financial Services Compensation Scheme to determine what protection may be available for existing and future claimants. Our job is to ensure this company is wound up efficiently and effectively while trying to realise maximum value for creditors."

The business is understood to have put aside hundreds of thousands of pounds to cover compensation claims by customers sold endowment mortgages.

Mr Nimmo is thought to be talking to financial watchdogs to clarify the position of claimants who have still to receive a pay-out or who have yet to complain about the centre.

The firm was reportedly making profits of above £1 million a year in the late 1990s, but in 2004 it is believed to have posted a loss of £200,000. The Mortgage Advisory Centre's trading figures are thought to have deteriorated sharply after 2004, following a deluge of endowment mortgage mis-selling claims.

It is believed that last year the company made a provision of £250,000 against the anticipated costs of settling complaints from policyholders.

Mr McGrail has been hit by the fall-out from one of the biggest consumer financial services crisis in recent years.

Clients of mortgage and insurance companies have received millions of pounds in compensation after their policies, which were designed to cover the repayments of interest-only mortgages, failed to meet projected targets and left them with shortfalls.

It was not clear whether the problems at the Mortgage Advisory Centre could affect Mr McGrail's other firms or his standing at Hearts.

The businessman won widespread backing of fans when he attempted to buy Tynecastle and lease it back to the club in a bid to stop former chief executive Chris Robinson moving Hearts to Murrayfield.

His plans failed after the Gorgie club's board dismissed his proposal.

But attempts to prevent Hearts leaving Tynecastle did succeed when Mr Robinson agreed to sell his stake to Lithuanian businessman Vladimir Romanov.

Mr Robinson, who was involved in a long-running battle with Mr McGrail, finally resigned from the club last week. He had wanted to relieve Hearts of their £20m debt by selling Tynecastle and leasing Murrayfield Stadium.

Taken from the Scotsman