Mitchells & Butlers's management can blame no one but themselves for the catalogue of errors that ended up losing shareholders £391 million on a deal that never happened.

First, the whole concept of spinning off its £4.5 billion properties into a seperate vehicle to be controlled by Robert Tchenguiz and releasing cash to shareholders in return for taking on more debt was controversial even before the credit squeeze. Selling off properties leaves a pub operating company paying much increased rents. This would have been in the face of falling beer sales as the smoking ban took effect and with uncertain economic outlook.

Punch Taverns, which looked at the idea of a property spin off, decided as early as May that it was unlikely to go down that route.

Secondly, management made the error of taking out inflation and interest rate hedges on the debt it would need to raise, before it had actually raised the money. Two weeks after it had committed to taking out the hedges, the banks pulled out of the deal.

Then, instead of closing down the hedge there and then, which would have saved itself hundreds of millions of pounds Tim Clarke and his team decided to put a brave face on it and keep gambling that the markets would move its way. They claim the consensus view at the time was that the credit crunch would be temporary. The truth is no one knew how long the crisis would last.

The board then allowed itself, under pressure from Mr Tchenguiz, to be persuaded, around November, that it could press ahead with a scaled down version of its property deal, borrowing less money. In fact confidence in credit deteriorated further in December and interest rates and inflation moved even more adversely against its hedge.

By sitting tight it has seen the cost of its hedge soar from some £60 million to £271 million in six months, all to insure against the costs of a deal that is now not going to happen.

Finance director Karim Naffah and the chief executive Tim Clarke were right to offer their resignations.

The remaining question is whether chairman Roger Carr should take his share of the rap and resign as well.

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