Receivers to get Nathans directors' $885,000 reparations
The $885,000 Nathans Finance directors were ordered to pay in reparation will go the the receivers for the benefit of all out-of-pocket investors, a High Court judge has ruled.
Thursday, 28 June 2012
by Jenny Ruth
Justice Paul Heath had to decide whether the money, plus accrued interest, should go to the receivers, Colin McCloy and John Waller of PricewaterhouseCoopers, or, as the Crown argued, it should be distributed by the court only to those who invested or reinvested in Nathans after the December 13, 2006 prospectus was issued.
Last year, Justice Heath convicted Nathans Finance directors Mervyn Doolan, Roger Moses and Don Young of making untrue statements in that prospectus.
If the prospectus had correctly identified the risks investors were facing "it is likely that receivers would have been appointed by the end of December 2006," Justice Heath said in his judgment.
Nathans Finance didn't go into receivership until August 2007.
If the company had gone into receivership earlier, those who had invested before the prospectus was issued "would have received a greater dividend," Justice Heath said.
"It seems to me preferable that the reparation be paid to the receivers of Nathans who can then use it for the benefit of all who have suffered loss," he said.
The funds are likely to be of greater assistance to investors, because the receivers can use them to pursue other means of recovery, than if only those who invested after December 13, 2006 received the money.
"The vast majority of the investors would not receive a material distribution from the reparation monies, particularly after administration costs are deducted," Justice Heath said.
In December 2006, Nathans owed its investors about $154 million and that increased to $174 million at the time of receivership. A total of $68.9 million was either reinvested or contributed as new investments between the two dates.
In convicting the directors, Heath ordered the reparations as well as sentencing Doolan and Moses to more than two years each in jail and Young to nine months home detention and 300 hours community service.
A fourth director, John Hotchin eaelier pleaded guilty to similar charges and was sentenced to 11 months home detention, 200 hours community service and fined $200,000.
Justice Heath noted another judge, Justice Graham Lang, ordered Hotchin's reparation should be paid to the receivers.
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