ACCOUNT and note holders of failed financial investor, Gippsland Secured Investments (GSI), received a further three cents in the dollar payment this week (from Monday, April 20).
The news comes on the back of a decision by the receivers and a community group not to pursue legal action against the directors and lending manager of GSI – even though they believe there is justification following recent public examination in the Supreme Court.
"After carefully assessing the examinations and the potential benefits, risks and costs of recovery actions against the directors and auditor, we elected not to pursue them at this time," GSI receiver Adam Nikitins told Stock & Land.
"Last week, the note holder committee was consulted in relation to the reasons for this and they concurred with the decision made.
"We examined four of the six directors and the lending manager in the Supreme Court over a number of days and whilst we believe we have legal grounds to pursue action against the directors for their conduct, we don't have a commercial interest to do so.
"The cost and timetable would be significant but the return could be insufficient for the litigation risk.
"We don't suggest in any way, however, they were wilfully negligent in their actions."
Mr Nikitins said he believed nobody was damaged sufficiently from GSI going into receivership, to justify pursuit of the directors and lending manager.
"There is nothing to suggest there were sufficient losses suffered because of their negligence, taking into account the risk and cost of pursuing an action that returns to note holders," he said.
In January, Stock & Land reported directors would undergo public examination and Mr Nikitins was hopeful findings of negligent or deliberate mismanagement would be proven and recovery action might be able to be taken against the directors.
Only four of the six directors and the lending manager were examined in court.
"Two older gentlemen with health issues were excluded as there wasn't much to be gained from putting them through the public examination process," Mr Nikitins said.
He also confirmed only principals involved with GSI in the two years leading up to receivership were examined in the Supreme Court.
"Our area of focus was not to go too far back," he said.
Mr Nikitins and Simon Cathro were appointed receivers of GSI in September 2013 and immediately began action to recover as much of the business' $143 million investment portfolio as possible, on behalf of 3800 note holders.
A note holder representative committee was established to liaise with the receivers.
Stock & Land understands ASIC partnered the receivers in the public examination.
"ASIC was in a symbiotic relationship with us in the Supreme Court action," Mr Nikitins said.
He expected the receivers' work to wind up soon, after the last settlement payments on properties sold in auctions 12 months ago, realisation of equities and settlement of collateralised debt obligations have been finalised.
A recovery action of proof of debt by GSI in receivership against Lehman Bros is still to be finalised.