A second class action on behalf of shareholders of failed insurance company, CBL Corporation Limited is underway.
Shareholders want compensation for the enormous financial losses they suffered when the company collapsed in 2018. New Zealand litigation funding firm LPF Group is backing the action against the directors of CBL Corporation.
Last week, Auckland law firm Glaister Ennor and litigation funder IMF Bentham Ltd announced a class action also seeking compensation for shareholders.
In this latest development, CBL shareholders have joined to launch a class action against the former directors of CBL and are encouraging other shareholders to sign up.
Institutional investor, Harbour Asset Management Limited and Australian based Argo Investments Limited are both named as representative plaintiffs of the class action. Shareholders’ interests in the management of the proceedings will be represented by a committee including Harbour Asset Management, Forsyth Barr and Argo Investments. A number of other institutional shareholders have indicated their interest to sign up as plaintiffs in the action.
“The collapse of CBL in 2018, just over two years after it was listed on the NZX and ASX, represents one of the largest corporate failures in New Zealand’s history,” says Harbour Asset Management Limited Managing Director, Andrew Bascand.
“In February 2018 CBL had a market capitalisation of around $747m, and the shareholders have lost everything. The directors of CBL need to be held to account, and the out of pocket shareholders must be compensated.
“Legal action is the only way shareholders can get any money back,” he says.
The shareholders have engaged a team who are highly experienced in commercial litigation to act on their behalf, including barristers Justin Smith QC, Mike Colson and Jonathan Orpin-Dowell together with law firm Meredith Connell.
Meredith Connell partner Fionnghuala Cuncannon explains their case for a class action.
“The legal action claims there were false or misleading statements made in the IPO documents in September 2015, and then ongoing breaches of the continuous disclosure obligations.”
“The statement of claim will allege that the CBL directors issued misleading statements in the IPO prospectus that the company had adequate financial reserves to meet its insurance obligations at the time it publicly listed on the NZX and ASX and failed to subsequently correct those misleading statements. Further, CBL had been under investigation by the Reserve Bank since July 2017 over concerns about CBL’s financial position and the inadequacy of its financial reserve,” says Ms Cuncannon.
LPF Group’s Phil Newland says that LPF is supporting the case because hundreds of millions of dollars have been lost by shareholders, it is about holding someone to account.
The CBL Class Action Statement of Claim will be filed in the High Court in October. LPF Group is funding the litigation on a success fee basis. Shareholders can register for the claim via www.cblclassaction.co.nz.
Investors who have signed up to the action supported by IMF Bentham can opt out within 21 days if they wish to join this CBL Class Action.