CBL shareholders seek redress for failure of the $747 million company
Harbour Asset Management and Argo Investments to lead class action against former directors
Jenee Tibshraeny, Interest.co.nz 18 October 2019
Harbour Asset Management is part of a group of investors leading a class action against the former directors of failed specialist insurer, CBL Corporation.
Having upped its stake in the NZX/ASX-listed company to 7.32% in the months leading up to it going in to voluntary administration in February 2018, the value of Harbour’s shareholding sat at $55 million.
Now Harbour Asset Management and Argo Investments will be representative plaintiffs in a class action against Alistair Hutchinson, Peter Harris, John Wells, Anthony Hannon, and Ian Marsh.
The action will be backed by litigation funding firm, LPF Group.
Forsyth Barr will join Harbour and Argo on a committee that will represent shareholders’ interests in the management of the proceedings.
The group said a number of other institutional shareholders were interested in signing up as plaintiffs.
Litigation funder, IMF Bentham, and law firm, Glaister Ennor, on October 14 announced they too were taking a class action on behalf of CBL shareholders.
Their action is against the company, put in liquidation in May 2019, rather than its former directors.
Harbour Managing Director Andrew Bascand said CBL’s collapse represents “one of the largest corporate failures in New Zealand’s history”.
“In February 2018 CBL had a market capitalisation of around $747 million, and the shareholders have lost everything,” he said.
“The directors of CBL need to be held to account, and the out of pocket shareholders must be compensated.
“Legal action is the only way shareholders can get any money back.”
A representative for the group, Meredith Connell partner Fionnghuala Cuncannon said:
“The legal action claims there were false or misleading statements made in the IPO [initial public offering] documents in September 2015, and then ongoing breaches of the continuous disclosure obligations.
“The statement of claim will allege that the CBL directors issued misleading statements in the IPO prospectus that the company had adequate financial reserves to meet its insurance obligations at the time it publicly listed on the NZX and ASX and failed to subsequently correct those misleading statements.
“Further, CBL had been under investigation by the Reserve Bank since July 2017 over concerns about CBL’s financial position and the inadequacy of its financial reserve.”
The group will file a statement of claim in the High Court before the end of October.
LPF Group is funding the litigation on a success fee basis.
It said investors signed up to the IMF Bentham action could opt out within 21 days if they wanted to join it group.
TO READ THE FULL ARTICLE ON INTEREST.CO.NZ CLICK HERE: