More than 50 investors in collapsed forestry scheme Timbercorp have been slapped with bankruptcy notices as liquidators ramp up their collection processes after a ‘Christmas’ moratorium on the recovery process lapsed. Source: The Sydney Morning Herald
Three investors have been bankrupted so far this year by liquidators at KordaMentha who are acting for the big bank to recover loans taken out by Timbercorp investors to invest in the company’s forestry, olives and almonds schemes.
Many more people are expected to be sent under in the coming months as the matters wind their way through the courts, with 51 people having already received bankruptcy notices – the precursor to being bankrupted.
A further 61 people have not defended debt recovery actions by KordaMentha and are likely to also receive bankruptcy notices.
Senator Sam Dastyari – who a member of the powerful Senate Economics Committee reviewing Australia’s managed investment schemes – slammed liquidators for issuing the bankruptcy notices.
“It’s obviously horrible to hear that anyone involved in the Timbercorp collapse has been bankrupted, and it looks like the number of people affected is going to increase over time,” he said.
“I have repeatedly called on both the creditor, ANZ, and the liquidator, KordaMentha, to show compassion to the victims of this collapse who are facing genuine hardship.”
KordaMentha partner Craig Shepard who is managing the insolvency process for Timbercorp Finance on behalf of creditors including ANZ Bank said the investors who have received bankruptcy notices had so far not engaged with the insolvency process in any way.
“We don’t actually want to be bankrupting people but we have a stat duty to recover the company’s assets,” Mr Shepard said.
“At every stage of the process we attempt to contact the borrowers to engage with us to seek a resolution to their indebtedness,” Mr Shepard said.
He said the process had been frustrated by some investors either receiving advice or being given the impression their loans would be wiped by a government decree.
As at 8 May this year Timbercorp Finance’s loan book had 2490 loans that had blown out to $380.1 million thanks in part to the addition of penalties for non-payment and capitalised interest on outstanding loans.
KordaMentha has filed a staggering 1273 debt recovery actions against investors in the managed investment scheme that collapsed in 2009, according to a letter sent by the insolvency firm to politicians and obtained by Fairfax Media.
The Supreme Court of Victoria has been swamped with 727 of those debt recovery notices with the remainder being filed in either the County Court or the Magistrates Court.
In late April the Supreme Court of Victoria began hearing test cases between the receivers and borrowers that could throw in doubt the legal validity of the loans.
Slater & Gordon is running the test case on behalf of members in the Agricultural Growers Action Group who were all Timbercorp investors.
AGAG chairman Neil White said he was confident in the success of the case that will be heard later this year.
“Whilst a positive outcome for the case would mean the elimination of the participants loans AGAG remains of the view that a common sense commercial negotiation/mediation has been our clear goal from the outset,” Mr Walker said.
Not all investors are pinning their hopes to the AGAG court battle, including Naomi Halpern who has been working through the Timbercorp Finance hardship process offered through KordaMentha.
Despite years of assessing the ability of investors to repay their debt, it was only in December that KordaMentha appointed an independent advocate to assess hardship claims by investors.
The appointment came after a public outcry over the raft of legal actions taken by liquidators at last year’s Senate hearings in Melbourne.
“There are lots of concerns about that program. There are some people who have been in this process for months and months,” Ms Halpern said.
She said KordaMentha had rejected several payment plans proposed by the advocate Catriona Lowe, insisting on higher payment rates.
Mr Shepard said each hardship claim was assessed case by case based on the individual circumstances of each person.
