Reparations
totalling $1.08 million paid by convicted Nathans Finance directors will not be
paid directly to investors but can be used by Nathans’ receivers to fund
further litigation against the directors following a High Court ruling. There is a prime facie case for receivers to sue Nathans’ directors for
trading whilst insolvent, the High Court said.
After being convicted
of securities offences for issuing a misleading prospectus, four directors of
Nathans Finance were required to pay reparations totalling $1.08 million to
reflect their remorse for the damage caused investors.
Payments were ordered
against Kenneth Roger Moses ($425,000),
Mervyn Ian Doolan ($150,000), Donald Menzies Young ($310,000) and John Lawrence
Hotchin ($200,000).
The High Court was
asked to rule on how this money should be divided.
Investors said it
should be divided between those who put money into the company after the
misleading prospectus was published. The
court was told that out of the $174 million dollars owed by Nathan Finance when
it went into receivership a total of $68.9 million was invested or reinvested after
the misleading prospectus was in the market place. Of that $68.9 million, the largest single
investor is owed $484, 200.
Nathans Finance receivers
argued that all investors and the company itself should be considered “victims”
of the offending.
Justice Heath ruled
that the reparation payments would be best used for the benefit of all who had
suffered loss by being paid to the receivers.
It provides a fund from which the receivers could pursue other means of
recovery, he said. There was evidence
that company indebtedness increased by about twenty million dollars when under
control of the directors in the eight months prior to receivership.
R.
v. Moses, Doolan & Young – High Court (27 June 2012)
12.015