Second class action targets CBL directors
Tim Hunter, NBR 18 October 2019
Two institutional shareholders sign up for legal claim to be filed this month.
Directors of failed insurer CBL are the target of a new class action announced today, led by shareholders Harbour Asset Management and Argo Investments.
The litigation will be funded by LPF Group.
“The collapse of CBL in 2018, just over two years after it was listed on the NZX and ASX, represents one of the largest corporate failures in New Zealand’s history,” Harbour managing director Andrew Bascand said.
“In February 2018 CBL had a market capitalisation of around $747m and the shareholders have lost everything. 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,” he said.
Harbour owned 7.2% of CBL at the time of its collapse in February last year.
Several CBL directors resigned in 2018 but it is understood the claim will cover all six directors who served on the board during its time as a listed company.
They were: Peter Harris, managing director; Sir John Wells, chair; Alistair Hutchison, deputy chair; Anthony Hannon; Norman Donaldson; and Ian Marsh.
The plaintiffs’ legal team will include Justin Smith QC, Mike Colson and Jonathan Orpin-Dowell, with support from law firm Meredith Connell.
Meredith Connell partner Fionnghuala Cuncannon said the legal action would claim there were false or misleading statements made in CBL’s initial public offer documents in September 2015 and continuing 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,” Cuncannon said.
Shareholders interests in the proceedings will be represented by a committee including Harbour, Argo and broking firm Forsyth Barr.
LPF Group director Phil Newland said the case was about holding people to account.
“LPF’s backing it because we consider it to be a very strong claim and one where investors are deserving of compensation.”
A press release announcing the claim said the lawsuit would be filed in the High Court this month.
Shareholders can register for the claim via www.cblclassaction.co.nz.
On Monday another group announced plans for a class action against CBL Corporation, but not its directors, funded by ASX-listed IMF Bentham.
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