opes, page-81

Liquidation is NOT in the best interests of the creditors and why IMF and Slaters voted this way and why Ferriers pushed this route is concerning.

Liquidation offers absolutely NO benefits at this stage. JL admitted that it would have "marginal" impact on the mediation as the banks know exactly what the threatened claims against them are, whether or not Ferriers technically has the right to issue legal proceedings as liquidator. The only argument proferred by anyone yesterday as to the advantage of liquidation was JL's attempt to say that it was unfair that everyone's relative positions kept moving with the market and liquidation would lock them in at today's date. That argument has no logic. There is nothing fair about locking in the positions today with an arbitrary result of a win for some and a loss for others. It's unfair that 27 March is not the date. There is nothing fairer about locking in a date today as against a date in two weeks time.

However, there is one very significant disadvantage. Liquidation now gives Ferriers the power to reach a settlement with the banks in relation to the invalid charges without coming back to the creditors for approval. Sure, they cannot settle in relation to our damages claims against the banks based on misleading conduct. However, that is little comfort. Our bargaining power for an "all up" settlement covering both aspects is significantly higher than negotiations on the damages claim alone. This is because the conduct of ANZ in particular at the time the charges were agreed is highly suspicious and presumably embarrasing. If the claim in relation to the invalid charges is settled, that information will never see the light of day. We will never know how bad it was and how it may have bolstered our bargaining power in relation to the damages claims.

The whole issue is compounded by the fact that there are substantial question marks about the conduct of Ferriers regarding these charges. Ferriers had already been engaged and have openly admitted that they were present at meetings between Opes and ANZ on or around the very day the charges were signed. Taken together, there is a real concern that Ferriers may be keen to have the charge matter settled to avoid having to expose the role that they played in the allegedly illegal conduct.

I admit that this is all merely speculation about possible ulterior motives of Ferriers for pushing for liquidation. I hope I am wrong. However, given this background, there is certainly a question mark, and in my view while we remain in the dark about both the competence and ethics of Ferriers in the mediation, this is more than enough reason to make it clear that it would have been in the best interests of the creditors to hold on to the power to settle the claim about the charges with the banks - not to hand that over to the Ferriers as liquidators.

So why on earth did the Slater and IMF groups vote for liquidation in light of this? It certainly raises question marks about their genuine interest in obtaining a settlement as opposed to allowing the matter to go to litigation.