centro cer v imf, page-14

I speak as a former banker with a graduate business degree in US without knowledge of the judicial system there in Australia. However, I understand there was a mistake in the reporting of short term vs. long term liabilities. Of course, management is to blame for this but I assume the report was audited and the blame should be shared by them also. More importantly, during the time period this occurred, which I believe was last summer '07, no one, including management could have reasonably anticipated the ensuing turmoil in the credit markets. At that juncture, Centro had a stellar financial performance record, unsecured(no collateral)financing, which was testimony to its financial strength. And although one could take the position Centro was on the higher side of leverage(geared), their debt to capital still lower than many..i.e. examine DRE,(USA) a premier reit, one of many with much higher debt/book capitalization.

If AUS is like us, these lawsuits shouldn't pass muster. Instead, I would classify this as a nuisance lawsuit. The classification of the asset wasn't material in terms of the creditworthiness of the borrower or the efficacy of Centro. And if the track record there is similar to that of the USA, the lawyers may receive a nuisance settlement, their claimants won't receive anything.