re: class action asx release
A story about IMF and what it does.
Litigation funders offered more than they can handle Kevin Andrusiak July 13, 2005 LITIGATION funds are turning down dozens of applications a week from people wanting help to finance insolvency and shareholder actions against businesses.
Recent decisions by Australian courts to allow litigation funding as an acceptable way of seeking justice has paved the way for many aggrieved shareholders and creditors to seek redress without having to worry about massive legal bills.
Listed fund IMF Australia said yesterday it was getting about 50 requests a month for funding, with many coming from angry shareholders upset about falling, or underperforming, stock prices. The company was having to turn away 85 per cent of requests because they failed to either meet strict criteria or because of legal opinion.
IMF chief financial officer Jon McArthur said IMF Australia expected to win 80 per cent of cases, while six out of 10 were settled outside of court.
High-profile battles it has agreed to fund include an action against Aristocrat Leisure, the West Australian finance broking scandal, and disclosure issues by senior figures at embattled aged care provider Village Life. Mr McArthur said IMF Australia would "more than likely" open an office in London before the end of the year, but expected to make a small loss for the last financial year.
He said given the three-year time frame for most cases and the uncertainty over outcomes, revenue and profit were often inconsistent from one year to the next.
"The lumpiness is likely to be reduced as more cases settle or go to trial in each financial year," he said.
"There is little competition at the moment, but it is likely to emerge in the future."
IMF Australia, which listed in 2001, had its best year two year's later on the back of significant victories against tobacco companies.
Yesterday, IMF Australia agreed to fund a growing family feud over the inheritance of Wright Prospecting, which gets royalties from iron discoveries made by Lang Hancock and Peter Wright in the 1960s.
Michelle Silvers, managing director of privately owned Litigation Lending Services, said her company was experiencing a surge in funding applications for insolvency cases. "The courts have now agreed that funding should be open to all types of litigation," she said. "We have seen an increase in insolvency claims."
Australian Litigation Fund managing director Patrick Coope said growth was steady.
ALF is a privately operated litigation fund which deals more with insolvency work.
"I think it is a combination of increasing awareness that litigation funding is available and the courts allowing it in wider circumstances," he said.
