Investors in Healthcare Locums Plc (HLO:LSE), the beleaguered specialist health and social care staffing firm, which suspended trading in its shares in January, have launched legal action against the company and its banks yesterday just hours after a stormy annual meeting, the Financial Times newspaper reports.
 
Between five and 10 shareholders, representing 30% of the group, are suing in an attempt to prevent a refinancing deal, which they say could dramatically dilute, or even wipe out, smaller investors.
 
The decision followed a fraught meeting in which Peter Sullivan, Chairman, spoke of his 'shock' at the state of the accounts and warned of a significant write-off of profits.

Sullivan, who joined the business in February, said he had been struck by the extremely poor levels of corporate governance and the "aggressive accounting practices regarding revenue recognition, capitalisation of costs and impairment of fixed assets".
 
Investigators from Grant Thornton have been conducting a forensic probe into the medical recruitment business, which replaced almost all of its board in the wake of the decision to suspend its shares due to alleged accounting irregularities.
 
Kate Bleasdale, the founder of HCL was sacked. Diane Jarvis, the finance director, resigned. The company has not revealed any further details of the accounting problems.

"The meeting was a mess. They were totally on the defensive", one AGM attendee told the Financial Times.
 
HCL has until 25 July 2011 to relist the shares and is considering a number of options, including a re­financing backed by Toscafund, its second-largest shareholder.
 
The private equity investor is understood to be proposing to buy the bulk of HCL's 130 million Pounds of debt, which it would use for a debt-for-equity swap.

HCL's shares are still suspended following an investigation into accounting irregularities. As of last trade, HCL's traded at 112.50 Pence, +29.31% above the 52 week low of 87 Pence set on 17 December 2010.