Duchess Of York 'Pushed To Insolvency'

(NewsCore) - The U.K.'s Duchess of York Sarah Ferguson is resisting a secret audit of her finances which concluded that her debts of up to £5 million ($7.7 million) are so severe that declaring herself insolvent is her only option, British media reported Sunday.

A review of her finances by insolvency experts at U.K. firm Price Waterhouse Coopers found that the scale of her debts means she will be unable to reach any informal agreement to repay her creditors.

The accountants’ report, which was presented to Ferguson last month, states, ’Given the number of creditors and pressure building with certain individuals, we no longer consider this [informal settlement] a viable option.’

The report says she has two choices. The first is to enter an individual voluntary arrangement with creditors, a form of insolvency where she can clear up to 75 percent of the debt and pay back the remainder over a long-term period.

The other option is voluntary bankruptcy, which would cause acute embarrassment to Ferguson, her former husband the Duke of York and his mother Queen Elizabeth II.

Ferguson is contesting the amount she owes and wants to re-launch herself in America, where she secured a six-part series on a new cable television channel owned by Oprah Winfrey, the chat show host.

A source familiar with the report said: ’It caused huge consternation. The accountants didn’t seem to have grasped either the wider repercussions of her going bankrupt or her future earning capacity. If Sarah goes bankrupt, everybody loses out. It causes huge embarrassment for her and the royals -- and the creditors get nothing. She is determined to sort this out without resorting to bankruptcy.’

The true scale of Ferguson’s debt is difficult to pinpoint. Some of her advisers put the debt at £2 million, while others insist it is closer to £5 million.