Ruling threatens OPI payout :::By ROB STOCK - Sunday Star Times...

Ruling threatens OPI payout :::By ROB STOCK - Sunday Star Times Last updated 08:23 15/03/2009::::: A moratorium agreed by debenture investors in OPI Pacific Finance is looking increasingly fragile after a court ruling in Australia and a $A20 million payment to mum and dad investors could be challenged as a result.

In May last year, 12,000 investors voted to allow OPI Pacific's management to continue looking after their money, despite the woeful state of loans they had made. Only about a quarter of its $475m of loans looked recoverable, leaving a likely shortfall of $286m in investors' capital.

They have not heard from the company since mid-December.

The moratorium was to allow OPI's management to negotiate agreements (deeds of company arrangement or DOCAs) with other creditors of its Australian parent company Octaviar (in voluntary administration) as a first step to divvying up the now much-reduced assets of Octaviar.

OPI Pacific's claim as a creditor of Octaviar is for "in excess of $A461 million" in relation to a pledge by Octaviar to underwrite OPI Pacific loan losses and to allegations of "negligence and breaches of the management agreement" under which Octaviar Administration handled a large portion of OPI's lending.

But one Octaviar creditor the Public Trustee of Queensland would not accept the DOCAs, or a claim by Fortress Credit Corporation to be the only secured creditor, and headed to court.

Its victory on March 6, in which Brisbane Supreme Court Justice Philip McMurdo ruled that a $A38.5 million charge held by Fortress over Octaviar was void as security, looks likely to spell the end for the DOCAs it heads to court again in May in a bid to have them set aside and for Octaviar to be put into liquidation, something it argues should have happened long ago.

Either outcome threatens the OPI Pacific moratorium. Liquidators might also try to recover $A20m in "unfair preference payments" already pocketed by OPI Pacific debenture holders.