Lawyers and RBS investors face-off to resolve legal impasse preventing rights issue compensation payments

High Court, London

A legal dispute between the parties that last year won £200 million in compensation from Royal Bank of Scotland over losses they incurred as a result of the Edinburgh-based lender’s now infamous 2008 rights issue prior to its near collapse, are to face off in court this week in a bid to reach an agreement that will allow the payment of the money to be made.

RBOS Shareholders Action Group, which claims to represent 27,000 investors who answered RBS’s £12 billion cash call in 2008, last June agreed to accept an 82p per share offer from the bank as a result of the legal action.

However, only £25 million of the settlement has so far been paid out because of an ongoing legal dispute between the Isle of Man business Manx Capital Partners that funded the class action and the action group itself.

At an earlier hearing London firm Signature Litigation, which is acting for Manx, alleged the action group had included 90 million “phantom shares” in its claim.

The allegation means RBS’S lawyers are unable to process any further payments because ownership of every share being claimed must be verified.

Manx’s lawyers are asking the judge, Mr Justice Hildyard, to order the action group to hand over all documentation relating to its members to clear the matter up.

Meanwhile the action group, which was formerly advised by Manx’s lawyers Signature, but now instructs Rosenblatt Solicitors, will argue that a dispute over Signature’s fees is the reason that investors are still waiting for their settlement.

With the costs of bringing the claim against RBS to be met out of the £200m settlement, the RBOS Shareholders Action Group itself since needed to secure other backing to fund its fight against Manx.

This has come in the form of a series of loans from British Virgin Islands-listed business Opis Asset Holdings, which is understood to have links to an Irish businessman.

According to reports, Opis has lent the group over £1m, with security for the sum being provided by a company called Evalusafety, which has an unknown link to the action group and is thought to be claiming £20m of the £200m settlement from RBS as a success fee.

The loans from Opis have been secured against that as-yet unpaid £20m.

Manx – the investment vehicle of Preston North End owner Trevor Hemmings – is understood to be funding its own legal costs.