Bernard Ginns: A cautionary tale as balance of economic power tilts East

Hanson Partners was majority owned by John Hanson, the Bradford-based entrepreneur and former chairman of Greenwoods Menswear, the 150-year-old retailer, and Parkland Textiles, which once employed 7,000 people.

Mr Hanson was known as an industry consolidator who bought struggling textiles businesses, turned them around and sold them on. He was once linked with a takeover bid for Austin Reed.

By 2009 Hanson Partners was in trouble. The business had borrowings totalling 6.6m and following the nationalisation of its main lender, Anglo Irish Bank (AIB), came under pressure to repay its 5.3m debt. AIB had previously been very supportive of Hanson Partners, funding some successful property deals.

But after the Irish government stepped in to take over the bank, its attitude hardened towards the business. A familiar story for many following the financial crisis.

Faced with a demand in mid-2009 to repay its loan in full within 12 months, the company implemented a survival plan, which included a reduction in staff of 26 people, including two directors.

Hanson Partners entered into discussions with other banks about taking over the debt to AIB. These ended in failure though as new bank lending needed new property valuations which resulted in higher loan to value ratios because of the fall in property prices.

The company decided to sell a property in Kinross, housing a cashmere business, to Zhongying, a Chinese company, and Jamie Montgomery, a Scottish businessman.

The sale, completed in May, raised enough to repay 3.8m to AIB and pay off most of the other creditors. According to the administrators' report, "it was felt that AIB would be more amenable to extending the repayment of their remaining loan".

Not so. The report added: "At various meetings in May 2010, AIB informed the company that it had 12 weeks to repay the remaining loan."

By the end of the month, Hanson Partners was placed in administration. The report concluded: "The directors of the company consider that the reasons for its failure were the property recession and the change of lending policy by the company's principal bankers."

And that was it. Until Mr Hanson phoned me to complain about the UK's decision to back the European Union's bailout of the Irish government. He has also written to Prime Minister David Cameron to express his "horror" at the bailout and his view that many Irish property companies with borrowings from AIB are still operating.

"Why have they not been dealt with in the same way my company was?" he asked the PM.

Mr Hanson, a former supporter of Sir James Goldsmith's Referendum Party of the 1990s, is angry too that British banks refused to help him refinance his loans, despite their benefiting from a massive UK taxpayer bailout.

"I am appalled at the Conservative Party's attitude towards small businesses," he wrote.

He believes there is a wider issue at work here, one that should concern us all. He told me: "What you have got in truth is the decline of Western Europe and the increasing importance of the Far East. That's where the wealth is now."

He's right if you consider who the winners are in this story. A Chinese company bought his Kinross property at a low point in the economic cycle. A Chinese retailer, called Bosideng, bought Greenwoods in January 2009 via a pre-pack administration. The losers, it hardly needs saying, are the people who lost their livelihoods and the taxpayers who are still having to pay for the excesses of the banking sector.

Mr Hanson's world view was echoed by Gordon Brown who warned yesterday that the next decade could be remembered as the "decline of the West... unless Europe and America change tack, rise to the biggest challenge of all – restructuring the world economy – and equip themselves to benefit from the next great global challenge – the dramatic rise in the consumer spending power of Asia".

In such terms, meeting that challenge can seem like a daunting task, until you realise many Yorkshire companies are already benefiting from this trend.

We highlight the success of one of those in today's newspaper. Skopes Menswear, based in Leeds, is a third generation, family-owned textiles firm that makes suits and sells them to growing numbers of customers in the Far East. According to Simon Cope, managing director: "The opportunities in China are mind blowingly huge. If you've got a brand in the UK and you can show you have foundations, the Chinese will love you. The amount of millionaires and billionaires in China is breathtaking."