THE liquidator of BCCI spent about £1 million prolonging its doomed court battle with the Bank of England for a month after the creditors’ committee told it to drop the case, The Times learnt last night.

Deloitte, the liquidator for the Bank of Credit and Commerce International, withdrew from its 12-year case against the Bank on Wednesday. The liquidator had claimed that the Bank’s employees had dishonestly overseen BCCI. The Bank will now try to reclaim its £70 million in costs.

On September 23 the English Liquidation Committee of BCCI, which represents its biggest creditors, passed a strongly worded resolution calling on Deloitte to “discontinue forthwith” the legal action. The resolution came after the creditors made repeated failed attempts to reach a settlement with the Bank out of court.

But rather than drop the case straight away, the liquidator chose to instead ask Sir Andrew Morritt, the Chancellor of the High Court, to rule on whether the case should be continued. Deloitte meanwhile carried on cross-examining the Bank’s witnesses.

A month later, after he heard representations from Deloitte and the creditors over a three-day hearing, Sir Andrew ruled that the action should be dropped.

Kevin Pullen, head of corporate recovery at Herbert Smith, which was not involved in the case, estimated that over the course of that month Deloitte probably spent about £1 million in legal fees. The Bank has spent roughly £2 million a month during the trial, which the liquidator may have to pay.

On Tuesday the liquidator said that the creditors’ committee had always supported the legal action. However, Bernard Clarke, the lawyer acting for the committee, said yesterday: “There is . . . no truth in any suggestion that the liquidation committee have always been supportive of the legal action in respect of the period from September 2005 onwards.”

The liquidator had sought to prove that the Bank had acted dishonestly when in 1979 it licensed BCCI as a deposit taker and during the Bank’s subsequent supervision of BCCI.

Justice Tomlinson exonerated the Bank’s employees. He added that it had been “a matter of surprise to me for about a year now that the action was being pursued”.

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