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 MARKET REPORTS |
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Companies
Creditors vote to liquidate Opes Prime
October 16, 2008
AAP
Creditors of failed stock lender Opes Prime Ltd voted to liquidate the company.
Wednesday's decision by Opes' creditors will enable the liquidator to pursue claims against Opes Prime's secured creditors, ANZ Bank and Merrill Lynch - that were not available to the administrator.
The administrator of Opes Prime, Ferrier Hodgson, have been involved in talks with ANZ, Merrill Lynch and the Australian Securities and Investments Commission since August to mediate claims that a liquidator of Opes might bring, in a bid to avoid years of potential litigation.
The mediation is continuing and remains confidential.
Receivers and administrators were appointed to Opes Prime on March 27 this year after cash and stock movement irregularities were uncovered in a small number of accounts.
Opes Prime owed clients about $585 million at the time of the collapse, but due to fluctuations in the share market that figure had fallen to about $400 million on September 22, according to Ferrier Hodgson.
About 1,200 Opes clients lost shares they had placed with Opes in return for margin loans, when the major secured creditors of Opes - ANZ, Merrill Lynch, Dresdner Kleinwort - began selling a pool of nearly $1.6 billion in shares soon after the Opes collapse, in a bid to recover money owed to them by Opes.
Opes had on-loaned the shares from its clients to these secured creditors, but Opes clients believe that they had retained ownership of the shares.
Numerous Opes clients have taken their own legal action in a bid to recover their shares.
Ferrier Hodgson has said a liquidator would challenge a transaction between Opes Prime and ANZ under which ANZ loaned $95 million to Opes one week before Opes collapsed.
Opes used the loan to repurchase shares from the ANZ so it, Opes, could re-deliver the securities to a client.
The administrator has said that the transaction would be challenged on the basis that Opes was insolvent at the time, and that the transaction was an unfair loan and an uncommercial transaction.
Ferrier Hodgson has said that if a legal challenge were successful, a court would seek to place the parties as close as possible back into the position that they were in before the transaction.
The administrators have said that a liquidator might be able to recover $205 million to $220 million from ANZ from various claims.
Outside the creditors' meeting, one of the parties currently pursuing its own legal action against the ANZ to have shares returned to it, Paul Choiselat of Beaconwood Securities, said Beaconwood would continue the litigation against the bank unless the outcome of the mediation was satisfactory to Beaconwood.
Mr Choiselat said even if creditors were to receive 30 cents in the dollar - the estimated return given by the administrators in April - Beaconwood would continue its legal action.
"For us, the settlement is about the money. Thirty cents is a long way from what we would expect to generate in an outcome in a court case," Mr Choiselat told reporters.
"There's no need for us to walk away from our litigation.
"Even if there were to be an offer by the bank, a mediated offer, that doesn't get rid of our litigation unless there was some little corner of that mediation that it earmarked to get rid of our litigation."
Ferrier Hodgson's John Lindholm, the Opes administrator, said Ferrier Hodgson had now been appointed liquidator.
"Creditors resolved to place the company into liquidation," he said.
"We will continue with our endeavours in the mediation and hopefully come back to the group with positive news and a good outcome."
Mr Lindholm said the mediation process was making satisfactory progress.
He said Wednesday's decision by creditors to liquidate Opes was a step forward.
"It gives certainty to the creditors' claims but the issue is resolving the mediation - that's our priority.'
The mediation talks our currently scheduled to finish by October 20.
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Companies: Creditors vote to liquidate Opes Prime
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