A Care home company is to receive a payout worth about £40 million after settling out of court with Barclays over the alleged mis-sale of a controversial rate swap product.
Graiseley Properties in High Street, Wednesfield, which owns Guardian Care Homes, took legal action against the bank over loans that were made to it in 2007 and 2008.
Barclays had sold Graiseley an interest rate swap linked to the Libor interest rate, which is the rate that banks loan to each other.
This was supposed to protect the customer from increases in interest rates but Graiseley said that failed to happen and ended up costing it millions of pounds more than expected.
Graiseley argued the deal was invalid because the bank’s traders had tried to manipulate the Libor rate.
The high profile case was due to go to trial at the end of the month but it’s emerged that a settlement has been reached worth around £40m, which will see Barclays restructure facilities for Guardian, which is owned by Graiseley Properties, based in Stone, Staffordshire.
The settlement, which is the first of its kind, will also mean that it will be easier for other firms to make similar claims against banks.
The two directors of the company, Peter Cooke and Gary Hartland, said they were sold the 20-year swap products on a £41m loan in in 2007 for subsidiary Graiseley Investments Ltd and a £29m loan to Graiseley Properties Ltd the following year.