The long-running settlement of the 2012 Banksia Financial Group collapse takes another turn on Friday as investors head to the Supreme Court in a dispute over $20 million in legal costs.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Kyabram-based public company went into liquidation in 2012, having raised more than $660 million from investors.
Of the 15,622 Banksia investors in regional Victoria, South Australia and New South Wales, 1450 were based in Ballarat, including 18 clubs, 54 super funds and 314 trusts.
Debenture holders have received around 82 cents in the dollar already. A final class action settlement was set to deliver a further $64 million, delivering a potential final payment of around 92 cents in the dollar. That settlement is now being appealed.
The complex case has seen the former director of Banksia investments, John Godfrey, who led the company since 1966, hit with a $25,000 fine and disqualified from managing corporations for five years in 2017.
Details of the final settlement state that while the claim was for $200 million, the trustee was willing to pay $64 million and release Banksia from further claims.
In 2017, Banksia Debenture Holders Action Group member Keith Pitman said it was a relief to finally bring to an end the five-year legal stoush.
“It’s about the best we could get I guess,” Mr Pitman said at the time.
“The effect it’s had on people in Ballarat has been quite massive, and even more so in Kyabram. A tremendous number of investors have already passed away given the high age group.”
However, legal fees and a payment to a funder’s commission for the action are set to cost the members of the group of litigants almost $20 million of the settlement amount. A number of the litigants are now heading to the Victorian Supreme Court’s Court of Appeal to dispute the terms of the settlement on Friday.
A Sydney barrister has agreed to act pro bono in the case, which is disputing the settlement sums claimed by the class action lawyers Portfolio Law Pty Ltd.
Portfolio Law has claimed $4.75 million (plus GST) in legal costs and disbursements, and $12.8 million (plus GST) for the payment of a funder’s commission. The total cost, including GST, amounts to $20 million, which the appellants deem excessive.
The appeal hearing will take place in the Supreme Court in Melbourne this Friday. Mr Pitman says any creditors and litigants are welcome to attend.
