27 June 2012

Nathans Finance: R.v. Moses, Doolan & Young


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