Settlement tipped in C + M receivers' case

Capital + Merchant Finance collapsed in 2007 owing some $167.1 million to about 7,500 investors. Photo / Jason Dorday

Capital + Merchant Finance receivers' case against the failed finance firm's trustee for alleged breached of duty did not begin as expected with lawyers instead meeting with a judge behind closed doors.

The Herald understands a conditional settlement has been reached.

Justice Raynor Asher did not elaborate on any settlement in a minute provided to the media this morning , but he did say "it is to be hoped that a resolution of the issues can be found".

The judge adjourned the case, which was sought by both Perpetual Trust and law firm Stace Hammond.

"I am satisfied that the case cannot proceed today. I therefore grant the adjournment application," he said.

Lawyers are due to have a telephone conference next Wednesday and give the judge a "progress report".

Perpetual Trust appointed KordaMentha as second receivers of C+M following the 2007 collapse of the finance firm, which owed investors $167 million The receivers later lodged action against the trustee company to try recover funds for investors.

KordaMentha also filed action against C+M's former lawyers Stace Hammond, alleging both it and the trustee breached the duties they owed the finance firm.

The case was the first time receivers of a failed finance company had gone to court to pursue recovery from a trustee company, which is tasked with protecting the interest of investors.

KordaMentha's action is being funded by a litigation financier, which is paying legal fees for the case.

The receivers latest report does not disclose who this funder is but says it will get back the amount they spent on the case plus any portion of the money the plaintiffs could be made to pay.

Because of the action against Perpetual - which created a conflict of interest as Perpetual appointed KordaMentha as receivers - it was replaced by Public Trust as the firm's trustee in September 2013.

The issue caused then Justice Minister Judith Collins to introduce stop-gap legislation in May last year.