West Perth financial advisory group Oakvale Capital has settled a dispute with former client Ceramic Fuel Cells Ltd, which will see Ceramic and its litigation funder IMF Australia receive $6.8 million.
The dispute stemmed from a series of financial investments made by Ceramic, which were written down by $27.4 million in late 2008 following the onset of the global financial crisis.
The investments were collateralised debt obligations (CDOs), which plunged in value.
Ceramic sued Oakvale to recover the full amount of its investment losses, claiming it was misled by its adviser into altering its investment policy to allow the inclusion of CDOs.
Ceramic said in a statement today that it has agreed to settle the case, with Oakvale's insurer to pay the agreed settlement sum by 27 August.
It was stated in the federal court proceedings that Oakvale's professional indemnity insurance was capped at $10 million.
After legal costs and IMF's share of the settlement sum, Ceramic said it will receive approximately $3.9 million.
In a separate statement, IMF said it will receive $2.9 million and generate a profit after capitalised overheads of approximately $1.9 million.
"IMF is considering a proposal to fund further litigation by Ceramic Fuel Cells against other parties for the balance of its losses," IMF said in a statement.