Auditors: Meet The Parents

In our Law-Now dated 15.03.06 "Auditors and Third Party Liability - Judicial Reassurance" we reported on the first instance decision in Man Nuzfahrzeuge AG and Others v Freightliner Ltd and Others [2005] EWHC 2347 in which a multi million pound claim made by a parent company against Ernst & Young, as auditors of its 100% owned subsidiary, was dismissed.

Last week, the Court of Appeal upheld that decision. However, the case serves as a general warning to auditors of subsidiary companies in relation to their potential exposure in circumstances where they know that the subsidiary could be sold.

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