Shareholders in the failed Resort Hotels company have settled a claim against accountants Coopers and Lybrand and merchant bank BZW.

The original claim had been for £5 million, plus costs, but within a week of the court date an agreement was reached.

The exact figure has not been disclosed but is believed to be in excess of £3 million.

The firms were accused of supplying false information to shareholders in a rights issue prospectus in 1992.

The failure of the Brightonbased company led to the jailing of Resort's managing director Robert Feld for fraud and the sale of the group's assets to Jarvis Hotels with shareholders receiving vouchers for stay in a Jarvis Hotel.

A shareholders' action group was formed after an acrimonious annual meeting in December 1993 when the company admitted it was in financial difficulties.

Businessman John Bancroft, who chaired the action group, said the shareholders were pleased with the outcome of eight years of campaigning for recompense.

He said: "The principal objective of the group was to represent the small shareholders' interests.

"In collaboration with a major institutional shareholder, the action group put forward a proposal for restructuring the company but under pressure from bank creditors the board of Resort refused to consider the initiative.

"There then followed a course of action by the directors resulting in Resort being de-listed by the Stock Exchange.

The properties were then sold to Jarvis without shareholder approval.

"We were not prepared to give up and we submitted a report to the Department of Trade and the Serious Fraud Office when the facts about the rights issue began to emerge."

During the trial of Feld, son of Resort's founder, Alf Feld, a former mayor of Brighton, the judge criticised Coopers and Lybrand and BZW for their presentation of the rights issue, which he said had been negligent.

The action group committee considered there was enough evidence to take action for damages against the firms and appointed law firm Edwin Coe to act on their behalf.

Days before the trial was due to take place the defendants agreed to settle out of court.

Mr Bancroft said: "The small shareholder is always at a significant disadvantage to the institutions of the City.

"The institutions have sources of information and influence simply not open to the individual.

All the individual can do is rely on the media and company circulars.

"Of course, if those circulars are false the individual shareholder is lost.

In this case, the individual shareholders have fought back and succeeded and I believe this to be a heartening message to all.

"The successful result shows that with determination and dedication the small shareholder can achieve recompense against professional advisors for their negligence."

The action group has now been wound up. Feld is now free.