It's understood there has been a settlement of a compensation claim brought by the receivers of collapsed finance company Capital + Merchant against trustee Perpetual Trust just before a High Court trial on the matter was due to be heard in Auckland.
High Court staff said a settlement had been reached in the case that was set down for this morning though neither of the parties involved could be reached for comment.
Receiver KordaMentha filed an action claiming $94 million in damages against the trustee and law firm Stace Hammond in 2013 alleging breach of contract and negligence and are paying for it through litigation funder, Australian-based Litigation Services.
The receiver has since reached a settlement with the law firm for an undisclosed sum with the payment being held in trust pending the outcome of the Perpetual case and has previously said the current trial is the only remaining potential avenue of recovery for investors.
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Perpetual said in its annual accounts that the firm had lodged a claim with its insurer and the directors were confident the company's exposure (if any), whether by settlement or adverse award, is not expected to exceed the limit of the company's insurance. They said it was impossible for directors to make a reliable estimate of the likely cost.
Capital + Merchant collapsed in 2007 owing more than 7,000 investors $167 million. The finance company's former auditor BDO Spicers has already agreed to an $18.5m settlement with the firm's liquidator, the Official Assignee. In their latest report in August, the receivers said they were closer to making a distribution of $10m, their share of the BDO Spicers payout, after settling some claims with first-ranking creditor Fortress Credit Corp and Perpetual Trust.
Perpetual Trust was owned by Pyne Gould Corp at the time of the financier's demise but the trustee business has since been sold to interests associated with Andrew Barnes and is now part of the Perpetual Guardian Group that is planning to list in Australia and New Zealand by the end of this year in a $150m initial public offering.
Former Capital + Merchant directors Wayne Douglas and Neal Nicholls and chief executive Owen Tallentire were jailed for fraud in 2012 for what the Court of Appeal later called "theft on a grand scale".