John Charcol sets up new company

Beleaguered mortgage broker John Charcol has set up a new business which industry sources say could be part of its ongoing restructuring plans.

The new firm, John Charcol 2010, is listed on Companies House as a private limited company with an incorporation date of 2 February 2010 and an address on Colmore Road, Birmingham.

John Charcol refused to comment on the venture but the move may be part of a plan to ease the provider out of financial difficulties.

The firm, which was due to file its full year 2008 accounts on October 31 2009, has not yet done so.

John Charcol has undergone a difficult last two years due to the decline in the UK's property market.

The brokerage, which opened in 1974, was bought by Bradford and Bingley in 2000 but sold back to founder John Garfield and co-founder Charles Wishart in December 2004.

For the year ended December 31 2007, it made a loss of £1.2m and in January 2008, it put itself up for sale with a valuation of around £50m and started a review of its ownership and structure.

In February 2008, it was revealed that three of the company's directors - Garfield, Wishart and Jon Moulton- put in additional loan funding of £1.5m as an "interim measure" between December 31 2007 and January 2 2008 before either a sale or a refinancing occurred.

However, in March 2008, a warning from its auditors, KPMG, that the company might find it difficult to keep operating due to its liabilities made a sale too difficult.

In May, the company decided on a refinance and closed its Manchester, Guildford and Birmingham offices and cut 69 of its 276 staff including product specialist Katie Tucker.

John Charcol's chief executive Ian Kennedy also left and founder John Garfield took his place on the management team and became executive chairman.

During 2008, directors were forced to pump in an additional £2.1m as well as underwriting a £1.3m rights issue and taking out a £1.2m debenture to ensure it met FSA capital requirements. In June 2009, it cut the basic salary of its sales force.