Are Northern Rock shares not worth a truffle? ask Paul Dacam & Harriet Dedman
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In judicial review proceedings challenging the shareholder compensation scheme introduced by the Treasury following nationalisation, the claimants—including the two largest institutional shareholders, both of which had amassed significant stakes following the Bank of England's announcement that it had provided Northern Rock with “a liquidity support facility”, and a number of others representing many of the 150,000 small shareholders who had acquired shares through demutualisation, employee incentive schemes and company pension funds—claimed that the scheme was unfair and incompatible with A1P1. They argued that, as the compensation scheme would result in their shares being valued at “nil” or a “derisory” sum, it amounted to an expropriation of their property without compensation.
The court dismissed the shareholders' case, finding that fairness did not require the state, having provided financial support to Northern Rock, to compensate its shareholders on the basis of the added value to their shares arising from that support. Without state support Northern Rock would have gone into
