Former director sues QMH: Group faces pounds 500,000 compensation claim over deputy chairman's departure

MARTIN MARCUS, former deputy chairman and joint managing director of the troubled hotels group Queens Moat Houses, has issued a writ against the company claiming more than pounds 500,000 compensation.

Queens Moat will fight the action and Andrew Coppel, the new chief executive, said it was not the intention to pay compensation to any director who had left since the shares were suspended in April.

Sources said Mr Marcus filed his writ about two weeks ago, claiming wrongful dismissal and payment for the outstanding two years of his service contract. According to Queens Moat's 1991 accounts the top three directors, of whom Mr Marcus was one, earned a minimum of pounds 265,000 a year. He was said to be on a golfing holiday and not available for comment.

Mr Marcus and the finance director, David Hersey, were suspended in April, and both resigned the following month. Mr Marcus drew criticism for selling 1.1 million Queens Moat shares in February, days before the close season rule barred directors' dealing before publication of the financial results. The Stock Exchange is understood to be looking at the circumstances surrounding the sale.

At Queen Moat's annual meeting yesterday Mr Coppel was asked whether he had uncovered any wrong- doing at the company. 'Certain matters have arisen which are being investigated and they will be dealt with at the appropriate time,' he replied.

Mr Coppel refused to elaborate, much to the annoyance of many shareholders, who criticised him for a lack of information. He could give no indication of the company's current worth nor when the suspension of shares might be lifted.

Other sources said the relisting would not be before the 1992 accounts are published at the end of the year, at the earliest.

Talks with Queens Moat's 64 banks, owed more than pounds 1bn, were progressing and tighter control had been imposed on management at the group's 200 hotels, Mr Coppel said.

The management incentive scheme, which operated at about 70 of the 103 UK hotels and is largely blamed for the troubles, is likely to be wound down. Only 38 hotels now operate the scheme, and Mr Coppel said he had personal reservations about it.

Queens Moat has raised its borrowing limit to pounds 2bn, though this was described as a contingency measure while the audit is conducted. The company's articles allow borrowings of four times asset value. However, Mr Coppel said the pounds 2bn figure did not imply that Queens Moat's assets were pounds 500,000. 'It is a precautionary measure to ensure that we do not breach our facilities when the 1992 accounts are prepared,' he said.

Mr Coppel was not the only one under fire from shareholders. John Bairstow, the former chairman being replaced by Stanley Metcalfe, was expected to attend the meeting. Although still a shareholder, the absentee had 'not got the guts to come and face up to the mess he has landed us in', one woman said.

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