INVESTORS will recover an additional $67.5 million from Westpoint Group after the nation’s top corporate regulator agreed to settle litigation against Westpoint’s directors and accounting firm KPMG.
INVESTORS will recover an additional $67.5 million from Westpoint Group after the nation’s top corporate regulator agreed to settle litigation against Westpoint’s directors and accounting firm KPMG.
The Australian Securities and Investments Commission announced this week that a confidential commercial resolution had ended Federal and High Court proceedings it had started against KPMG on behalf of a number of mezzanine companies, which formed part of the Westpoint Group.
ASIC said that, under the terms of the settlement, $57 million would be made available in the next 30 days, with the balance available to the relevant Westpoint company liquidators subject to a number of confidential conditions.
An estimated $388 million was invested by 4,000 investors in a series of mezzanine funds overseen by Westpoint, which was founded by Norm Carey.
ASIC expects to recover about $100 million from the 19 actions launched since 2006. It has so far settled six claims, recovering $24.5 million.
That includes settlements with: Professional Investment Services worth $5.9 million; Bongiorno Financial Advisers and Bongiorno Financial Advisers (Aust) worth $2.9 million; State Trustees for $13.5 million; Glenhurst Corporation for $2.5 million; and Joseph Dukes for $1 million.
In November 2008, ASIC settled a confidential claim for investors against Masu Financial Management.
Litigation fund IMF Australia has also secured a confidential settlement in the legal action against Quantum Securities and QBE Insurance in relation to Westpoint.
IMF funded the proceedings in the New South Wales Supreme Court for certain investors against the two groups, receiving about $2 million.
ASIC chairman, Tony D’Aloisio, said this week’s settlement would avoid delays associated with conducting a trial in September, and provided an additional return for investors who lost money as a result of the collapse.
“A confidential commercial resolution is, because of the age and circumstances of the investors, the preferred resolution in a case such as this where litigation can take years,” Mr D’Aloisio said.
“This view has been shared by parties involved who have engaged in constructive and bona fide discussions to resolve these issues.”
Investors in Westpoint-related financial products had $388 million outstanding when it collapsed in 2005.
The latest settlement brings the approximate total funds recovered from the collapse to between $160 million and $170 million, ASIC said.
ASIC had previously recovered more than $25.5 million through settlements with Victoria-based financial services firm State Trustees and a number of other financial planners.
Liquidation processes have recovered $49.2 million, and ASIC expects that figure to reach $56 million once all assets have been sold.
Returns from Westpoint companies not in liquidation are expected to reach $22.5 million.
