A New Zealand-based insolvency expert has been put in charge of a new state government authority that will decide how $1.7 billion from the Bell Group litigation will be distributed.
A New Zealand-based insolvency expert has been put in charge of a new state government authority that will decide how $1.7 billion from the Bell Group litigation will be distributed.
Treasurer Mike Nahan said KordaMentha partner Michael Stiassny had been appointed to run the WA Bell Companies Administrator Authority, while the new legislation aimed to avoid any further long-running litigation between the remaining creditors of Bell Group, which collapsed in the early 1990s.
The Bell Group Companies Act transfers property of the Bell companies to the new authority, which will receive claims from creditors, assess them, and recommend how much should be paid to creditors.
After almost 20 years of litigation, settlement between the liquidators of Bell companies and banks was finalised last year for $1.7 billion.
“The state government welcomes the passage of legislation to stop the decades-long consumption of public resources through associated court actions, and to conclude these matters for the benefit of creditors,” Dr Nahan said.
“Mr Stiassny’s strong background in dealing with companies in insolvency and his dual qualifications in accounting and law make him an eminently suitable choice for this position.”
Mr Stiassny has over 30 years’ professional experience in both New Zealand and the UK, having worked with several major banks and financial institutions.
He is currently chairman of a number of companies, including ASX-listed insurance company Tower.
The legislation introduced by Dr Nahan in May using rarely used powers under the Corporations Act was criticised by the Australian and Western Australian bar associations in June, which were worried that the bill could criminalise any legal challenge to its validity.
Bell Group’s major creditors are the Insurance Commission of Western Australia, the Australian Taxation Office, Dutch billionaire Louis Reijitenbagh, and Perth-based Hugh McLernon.
Mr Reijitenbagh funds and controls Plaza BV, which in turn funds and controls the liquidated Bell Group NV.
Bell Group NV is a creditor of Bell Group and Bell Group Finance, and provided some of the early funding to the liquidator in 1999.
Mr McLernon is associated with private company WA Glendinning Pty Ltd, which bought a Bell Group debt for a token sum in 1991.
WA Glendinning is believed to be seeking a $200 million return.
Bell Group was the flagship company of the late Robert Holmes a Court, but after the 1987 stock market crash, it came under the control of another prominent Perth entrepreneur, Alan Bond.
The legal action against the banks was commenced in 1995 by Bell Group liquidator Tony Woodings.
Mr Woodings’ key claim was that two banking syndicates, including Westpac, Lloyds, National and Commonwealth, knew that Bell Group was insolvent when they obtained security over its assets in 1990.
The banks put Bell Group into receivership in 1991 and subsequently recovered $265 million from asset sales, leaving nothing for other creditors, who have been trying ever since to claw back some of that money.
With inflation and interest, the amount in dispute has increased to $1.7 billion.
The case commenced in the Supreme Court in 2003 with the original judgement handed down in 2008, largely finding in favour of the liquidator.
Justice Owen ordered the banks to repay approximately $350 million principal, together with compound interest, resulting in a $1.66 billion award.
In 2012, the Court of Appeal (by majority) confirmed Justice Owen's findings and increased the interest rate applicable, lifting the total payout to $2.7 billion.
The banks subsequently paid $718 million to the liquidator. As creditors of Bell Group, the banks stood to gain some of the funds available for distribution.
In 2013, the matter was due to go to the High Court, but the banks and other parties negotiated a conditional settlement in September of that year.
The litigation was finalised in June 2014 when the conditions of settlement were satisfied.
The effect of the settlement was that the banks relinquished all claims in Bell, leaving $1.7 billion with the liquidator for distribution between the remaining creditors.
The liquidators accepted the figure of $1.7 billion, recognising that the difference between that sum and the judgement sum of $2.7 billion made allowance for the notional dividend the banks would have received as creditors and for a discount to avoid the risk of an adverse judgement in the High Court.
