Liquidator Ferrier Hodgson is seeking funds to investigate the possibility of taking legal action against former directors of the collapsed Forge Group.
The legal action could include public examinations of its previous board members, according to the West Australian.
The company collapsed in February 2014 following cashflow issues, leaving creditors $800 million in the hole. Commercial litigation funder Bentham IMF launched a class action against the company its former directors, and management on behalf of shareholders, in the same year, relating to the company’s alleged misleading and deceptive continuous disclosure obligations in the lead up to its collapse.
Ferrier Hodgson has previously gained litigation funding from IMF Bentham to investigate insider trading claims against one of Forge’s biggest shareholder’s, engineering company Clough.
In an annual report to creditors, Ferrier Hodgson said negotiations with a litigation funder were substantially advanced for investigating “other causes of action”.
Ferrier Hodgson partner Martin Jones said both the directors and other third parties could be the subjects of such action.
“At the moment we just don’t have enough money to conduct a thorough investigation to see whether those claims may or may not arise,” Jones told WestBusiness.
Jones went on to say investigation of the Clough claims were at a preliminary stage, with examinations of Clough officials also to be pursued.
The insolvency company has been unable to question Samsung C&T executives in court in connection with the Roy Hill iron ore project manager’s seizure of $111 million in Forge bond money, the West Australian said, adding, Samsung has kept away from the examinations through a number of legal challenges, including that the claims be heard by an arbitrator in Singapore.
Further delays were caused by a subpoena that prevented a more in-depth hearing of the issue, although it still found in the liquidator’ s favour. It also said approximately $20 million in compensation was paid by the Federal Government in response to claims made by 1656 former Forge workers.
The payout was about $13 million short of claimed entitlements in line with caps on individual payouts and eligibility.