from the sons of gwalia case

This was the historic passage announced on 15/09/2005, from delisted.com.au.


the Judge has found in favour of the shareholder who cross claimed seeking a declaration that he is a creditor of the Company - according to this decision shareholders are therefore entitled to all the rights of a creditor under the Corporations Act including the right to attend meetings of creditors of the Company, vote at meetings of creditors of the Company and receive information and circulars sent by the Company to its creditors - also payment of the debt is not to be postposed behind payment of debts owed to other creditors who are not shareholders - IMF Australia funded this action and say "this decision is a clear precedent for all shareholders who purchased their shares on the market, as distinct from shareholders who purchased their shares from the Company through an initial public offering, placement or rights issue" (while this may ultimately benefit SGW shareholders it will have much wider ramifications for the relationship between the providors of debt and equity capital) - the lawyers for the Administrators are currently preparing to appeal this decision to the Full Court of the Federal Court - their case will be filed within the next 21 days...

and then this passage from same case on 27/02/2006..

IMF (Australia) Ltd announces that the Full Court of the Federal Court today unanimously dismissed the Administrators' appeal from Emmett J's decision - the Court confirmed that shareholders who buy on the market are entitled to prove as creditors in an insolvent administration where the company breached continuous disclosure obligations or misled them in representations made to the market about the company's financial circumstances and the shareholders' claims rank equally with non-shareholder creditors - unless the Administrators are granted special leave to appeal to the High Court from this judgment of the Full Federal Court then the matter will proceed through the Administrators' proof process.

and finally from 01/02/2009

in a 112 page report, the Corporations and Markets Advisory Committee (CAMAC) has advised the government that the High Court's decision in the Sons of Gwalia case (which ranks the claims of aggrieved shareholders alongside those of unsecured creditors of a failed company) should remain as a matter of policy - we understand that some $1.2 billion in claims have been admitted by SGW administrators, about a third of which are shareholder claims....

ends..

Interesting to see IMF involved in (and funding)the class action, and the administrators included Darren Weaver from Ferrier Hodgson.

Did CMR mislead us in representations made to the market about the company's financial circumstances?

I reckon they did, quite a few times, dont even have to go back that far. Everything was happy on 27/01/2009, cap raising going ahead. Seems misleading to me..

F.H are drawing up a circular available to registered shareholders "shortly".

TCG