Really Pants

Cotton Bottoms and HBOS

Businesswoman Joanne Freer looked to be on a winner with her brand of re-useable nappies.

But the dream soured and she had to sell the business, blaming HBOS and the consultancy she was forced to hire as the price for a bank loan.

“It left me completely penniless because we’d sold property, we’d cashed endowments, we sold everything that we had and everything we had was in the building and was in the business and you know we lost everything because of that,” she said.

An investigation by BBC File on 4 has found other businesses complaining about their treatment by an executive from HBOS’s ‘high risk’ team and consultancy Quayside Corporate Services (QCS), who these businesses were required to pay.

Cash needed

Allegations of reckless borrowing and irregular practices at HBOS are due to be debated in the House of Commons next week.

It is scant consolation to Mrs Freer whose eco-friendly venture Cotton Bottoms had won several awards and attracted attention from well-known chains such as Waitrose, Boots, the Co-op and John Lewis.

She needed an injection of finance to expand the business.

She secured £400,000 from HBOS, but as a high risk loan it came with strings attached.

An executive in HBOS’s ‘high risk’ team, based in Reading, insisted she engaged QCS with one of its employees Michael Bancroft sitting as a non-executive director on the board for a fee of £18,000 a year.

“He [the bank employee] also put in a condition that over and above the 1% fee they were already charging for the overdraft, he wanted to levy a further one-off £60,000 arrangement fee,” said Ms Freer.

She added: “I thought it was very unfair and very unusual.”

Boardroom bust-up

Mrs Freer got the fee cut to £20,000 but the relationship with Mr Bancroft soured further resulting in frequent boardroom rows including a fight over Mr Bancroft’s plans to make key people redundant in the business.

“I just couldn’t understand why he would do that, because effectively it would kill the business because we’d be getting rid of the people, generating the turnover in the business,” she said.

Within eight months getting the extra credit, fees owed to the bank and its agents were a huge burden, boardroom battles had robbed the firm of its vitality, sales had collapsed, her marriage had fallen apart, and the bank called in the loan.

Mrs Freer claims she had to sell the company off cheaply.

Mr Bancroft refused to be interviewed by File on 4. A letter from his solicitors characterised Mrs Freer as irrational, rude, un-cooperative and obstructive, and that her company lacked stable and mature management.