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March 5th, 2013 
David Schulberg the 3rd
Posted
Lawyers running a class action for investors owed money by collapsed finance company Banksia Securities claim the company’s accounts were wrong.
Banksia collapsed in October last year, owing investors $660 million.
Up to 16,000 investors, many of them retirees from rural Victoria, began their class action last December hoping to get some of the money back.
Lawyers told a meeting in Warrnambool in south-west Victoria yesterday that Banksia Securities did not put enough money aside for bad debts.
Norman O’Bryan SC, the barrister running the class action, says receivers have already indicated investors will get about back about half the money they invested.
But he is hoping to recover more.
“We’re not going to, unfortunately, get them back to 100 cents in the dollar,” he said.
“But even if we could win them another five or 10 or more cents in the dollar, that’s a significant chunk of money that they would otherwise not receive.”
Mr O’Bryan says the investors have a strong case.
He says according to Banksia’s most recent audit in June last year, the company only had the provision for bad or doubtful debts of less than $7 million.
But he says this does not add up with the receiver’s report, which shows that just two months later, loans in default totalled about $170 million.
“Ask yourself the question – how on earth could a provision for bad or doubtful debts go from less than $7 million to $170 (million) or more in two months? The answer is, it could not,” he said.
“The reality is of course that these loans were going bad, as all loans do over a period of time, and they should have been recognised as going bad much earlier and something done about it.”
He says there is no evidence that anyone deliberately misled anyone else. But he says there is no question the accounts were wrong and inadequate.
“People reading them would not have been able to be put in a position to understand the true position of Banksia,” he said.
‘Totally devastating’
Pensioner Eleonor Symmonds, 59, and her husband invested $62,000 with Banksia Securities.
She thought she had lost everything when the company collapsed last year.
“It was just well totally devastating, I mean I couldn’t stop thinking about it,” she said.
“I dreamt about it, I thought about it during the day. It wouldn’t let me sleep.
“Every time I woke up I’d think about it, it just took over my whole life to the point where I ended up in a psychiatric hospital.”
A directions hearing for the class action is being held in the Victorian Supreme Court in two weeks.
While investors like Ms Symmonds are hopeful, they know the process will take a long time.
“It could take two, three or more years,” she said.
“There are very elderly people there who have said to me, ‘we’ll probably be dead by the time we get everything we can get back’.”
Topics:
consumer-finance,
business-economics-and-finance,
company-news,
courts-and-trials,
law-crime-and-justice,
warrnambool-3280,
vic,
australia
Source Article from http://www.abc.net.au/news/2013-03-05/class-action-lawyers-say-banksia-accounts-wrong/4552554
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