Banksia Securities receivers have abandoned mediation with the failed finance company and taken legal action against the company’s former directors and auditors.
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McGrathNicol receivers said they filed a statement of claim this month in the Victorian Supreme Court after mediation in August ended with no successful outcome. The court has ordered Banksia’s former auditors, directors, officers and legal advisors to present a defence to the receivers’ claims by December 5.
The legal action by the receivers is the second claim against Banksia’s auditors and directors, who also face a class action for $150 million by Banksia’s 16,000 investors.
The class action faces a hurdle, with solicitors acting for former Banksia Securities founder and managing director Pat Godfrey claiming there was conflict of interest by the class action’s solicitor because the class action’s legal representatives were also funding the action.
Tony McGrath, from McGrathNicol receivers, said its legal action would likely prevent the possibility of further repayments to Banksia investors in the short to medium term.
Mr McGrath said McGrathNicol would review the repayment position as the litigation process proceeded.
“We are conscious that debenture holders have been waiting a long time for a final repayment,” he said.
“We need to allow our legal proceedings to unfold and report to debenture holders again in the new year, with an update on those activities and the repayment profile.”
To date, Banksia investors have received repayments of 80 cents in the dollar.
McGrathNicol has estimated investors might receive a further two to three cents in the dollar before any proceeds from litigation and subject to the costs of future legal proceedings.
ehimmelreich@fairfaxmedia.com.au