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More shares missing in Maxwell secret deals

LONDON -- The crumbling communications empire of the late Robert Maxwell, in disarray on both sides of the Atlantic, faced more financial problems Friday -- the disappearance of shares in the Berlitz language group owned by its U.S. subsidiary Macmillan.

That news late Thursday followed moves by London courts to take over operations of the debt-laden congolomerate and by the New York Daily News' filing for Chapter 11 protection under the U.S. Bankruptcy Code.

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The crush of recent developments has generated more speculation about the Nov. 5 death of Maxwell, whose body washed ashore in the Canary Islands after he disappeared from his cruising luxury yacht.

Spanish authorities have tentatively called his death accidental and an inquest is to be held next week.

In a statement late Thursday, the publicly traded Maxwell Communications Corp. said it learned that its shares in Berlitz had been removed from its control.

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'Vigorous efforts to trace and recover these shares are under way,' MCC said.

The apparent disappearance of the shares, part of publishing house Macmillan's 56 percent stake in Berlitz, could delay the $260 million sale of Berlitz to Fukutake Publishing of Japan.

The sale announced Nov. 7 was to help meet its debt payments.

The revelation about the missing Berlitz shares comes after Mirror Group Newspapers, the other public firm controlled by the Maxwells, found that 350 million pounds ($626 million) in pension funds was lent to private Maxwell companies.

MGN said Thursday MCC and MGN pension funds were owed about 400 million pounds ($716 million) by the private Maxwell firms. It said they expected to recover no more than 100 million pounds ($179 million).

The Financial Times reported Friday that the Maxwell brothers, Kevin and Ian, and their late father, Robert, were responsible for the secret loans from the Mirror Group pension fund to their private companies, according to senior directors of the group.

The newspaper said there was no implication the loans were illegal but that they were made on the condition that the private companies provide collateral.

The newspaper reported that three directors of Mirror Group Newspapers independently confirmed that the signatures of the Maxwell brothers were on documents authorizing the transfers.

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The Serious Fraud Office is investigating the disappearance of millions of pounds from the two pension funds.

News of the pension fund loans and that MCC and MGN made previously undisclosed and secret loans totaling 290 million pounds ($519 million) to the private arm of the Maxwell empire finally forced the Maxwell brothers Thursday to give up their battle to rescue the family businesses.

The brothers asked for the two main family holding companies, Headington Investments and Robert Maxwell Group, to be put into administration to protect the firms from creditors.

The court-appointed auditors of accountants Arthur Andersen later said the two top companies and their 400 subsidiaries owed 1.4 billion pounds ($2.5 billion) and had significantly less in assets.

Joint administrator John Talbot said all the assets controlled by the two private companies would be put up for sale.

Among the assets under the administrators' control are a 51 percent stake in Mirror Group Newspapers, the owner of the Daily Mirror, a 68 percent share in Maxwell Communication Corp., which owns the U.S. publishing house Macmillan, the newspapers, The European and The New York Daily News.

Other interests include a 6 percent stake in Newspaper Publishing, owner of the British daily The Independent, 10 percent of merchant bank, Henry Ansbacher, and the marketing research firm AGB International.

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Talbot said many, but not all of these assets have already been pledged as security on loans to bankers, who are owed around 800 million pounds ($1.4 billion) by the Maxwell family. The total debt of the private empire and MCC and MGN is estimated at 2.7 billion pounds ($4.8 billion).

The administrators said while they were in charge of a controlling stake in both MCC and MGN, neither of those public companies were in administration.

Trading in MCC and MGN has been suspended on the London stock market.

Separately, in New York, the Daily News filed for protection from its creditors under U.S. Chapter 11 insolvency legislation.

Ian Maxwell told the staff of the weekly London-based newspaper The European Thursday night he would also ask that it be put into administration to keep it safe from creditors to allow it to be sold, a staff member said.

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