Big court action seeks to recover lost money from guilty directors
One of the biggest civil court actions in New Zealand legal history has been filed against former directors of the failed finance company Bridgecorp.
Bridgecorp receiver PwC has filed civil action in the High Court at Auckland for $442 million against three of the five former directors.
PwC lawyer Murray Tingey said it was claiming the money for "breach of directors' duty".
Rod Petricevic, Rob Roest, Peter Steigrad, Gary Urwin and Bruce Davidson - who was also the chairman - were Bridgecorp's directors when it collapsed in July 2007 owing 14,500 people about $490 million.
Petricevic and Roest have since been declared bankrupt, exempting them from the legal proceedings.
Mr Tingey said Bridgecorp was not the biggest finance company that had collapsed in New Zealand, but it may be involved in one of the biggest civil claims against one.
Lawyer James Farmer, QC, said the biggest civil court judgment he knew of was the Equiticorp judgment against the Crown in the mid 1990s.
Mr Farmer acted for the statutory managers, who were awarded $400 million.
He said this was New Zealand's biggest civil judgment at that time.
Simpson Grierson partner Graeme Christie said the case was "certainly up there as one of the more significant claims in New Zealand".
"I would have thought that [$442 million] is up there as one of the biggest, if not the biggest, civil suit in New Zealand."
It is understood that if Steigrad, Urwin and Davidson lose the court action, any damages awarded will be sought until a summary judgment is heard.
If payment is then not received, a bankruptcy will be ordered, leaving it up to the official assignee to reclaim any money by dissolving assets.
In July this year, Bridgecorp investors received a second payout from PwC - formerly PricewaterhouseCoopers - taking the total recovered to 8c in the dollar.
A PwC receiver's report last month said it was unlikely more than 10 cents in the dollar would be returned.
Semi-retired Waikato dairy farmer Brian Gordon said he and his wife Sheryll lost $200,000 in the Bridgecorp collapse.
Mr Gordon, 63, said he was pleased to hear the former directors were still being chased for the money that he lost.
"Initially I hoped that they spent a few Christmas' in jail, and that's about all that I thought I would get.
"I guess, ultimately, we'd all like our money back, but I know that's not going to happen."
He said he'd had about $18,000 back.
"We're not happy, of course, but every cent we get back is good."
Steigrad's lawyer, Brian Keene, said a defence had been filed on behalf of each of the three directors.
"I think that if you spoke to the receivers they would say they are interested less in Mr Steigrad or Mr Davidson, whose personal assets wouldn't make any real impact upon a creditor pool, and much more upon whether they can get money out of the insurance policy."
Mr Keene said the receiver's actions had tied up the insurance policy and prevented any payout.
"It's become one of those legal tangles and what lawyers are going to have to do is to try to make sure money gets to investors, as opposed to spending lots of time and money on cases which are too full of bravado."
The PwC receiver declined to comment while the case was before the court.
Who got what
In a case brought by the Financial Markets Authority, the five Bridgecorp directors were convicted of making untrue statements in the failed finance company's offer documents.
Rod Petricevic and Rob Roest were found guilty at trial and were each sentenced to six and a half years in prison.
Peter Steigrad was found guilty at trial and sentenced to nine months of home detention, 200 hours' community work and ordered to pay $350,000 reparation.
Bruce Davidson, the chairman, pleaded guilty and was sentenced to nine months' home detention, 200 hours' community work and ordered to pay $500,000 reparation.
Gary Urwin pleaded guilty and was sentenced to two years in prison.
Petricevic and Roest were also convicted of Crimes Act charges because of statements in Bridgecorp's offer documents saying the company had never missed a payment of interest or principal to investors.
Other Serious Fraud office proceedings extended Petricevic and Roest's sentences by six and three months respectively.