See article by Anthony Marx in Courier Mail: http://www.news.com.au/couriermail/story/0,23739,25156304-3122,00.html
THE Public Trustee of Queensland has scored a key win in its effort to wind up parts of the Octaviar finance and tourism group not yet in liquidation.
Brisbane Supreme Court Justice Philip McMurdo ruled that a $38.5 million charge held by Fortress Credit Corporation over Octaviar Limited was void as security.
Fortress, which had been the only secured creditor when Octaviar collapsed in September owing $1.8 billion, had agreed to accept $25 million to settle the debt.
A majority of institutional creditors accepted Fortress's secured status when they approved a deed of company arrangement in December over Octaviar Administration and Octaviar Limited.
The creditors were willing to accept 10¢ or less on the dollar once administrators of the two entities dispersed about $140 million in remaining cash and sold off a 35 per cent stake in the Stella Group of tourism assets. Fortress would have recovered 65¢ on the dollar.
The ruling means that administrators with accounting firm Deloitte may now be forced to restructure or scrap the deeds over the two entities. That is consistent with the Public Trustee's position that the companies, formerly known as MFS, should have been wound up from the start.
The government agency argued successfully creditors should have been told the Fortress charge was invalid before they voted for the deeds. Acting Public Trustee Patrick Wedge on Friday said he was acting in the best interests of noteholders, about 560 of whom are chasing $359 million.
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