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The Shareholders Association has succeeded in the first step in its plan to have former Feltex directors banned from the boards of other companies.
Feltex - the shell of the failed carpet maker - was officially put into liquidation by the High Court at Auckland yesterday after an application by the Shareholders Association.
The association wanted to move to liquidation so it could try to have the ex-directors banned by the Ministry of Economic Development from other boards for up to five years and set up a fund to investigate possible litigation.
Chairman Tim Saunders and directors Michael Feeney, John Hagen and David Hunter resigned on October 19, while former chief executive Peter Thomas, who was also a director, resigned when receivers were appointed on September 22.
Company law specialists have cast doubt on the association's plan, saying it would prove very difficult.
The sale of Feltex assets and operations to Godfrey Hirst was completed this month and the company renamed EXFTX.
Shareholders Association director of advocacy Ross Dillon said it was a hard victory to be pleased about.
"It's not the Shareholders Association's usual course to be promoting the liquidation of a listed company but our view was looking at all the alternatives ... it did seem the best thing to do in the circumstances."
The next step was for the liquidators to start inquiries "to find out whether there's anybody worth suing".
A liquidator could seek the return of money paid by Feltex if the payments were improper, could bring in a third-party financier or could invite shareholders to contribute to a fund on a pro rata basis.
The proceedings also revealed that the sale to Godfrey Hirst did not realise enough money to pay out Feltex's bank, Dillon said. Receiver Colin Nicol confirmed that a "small amount" remained unpaid to ANZ but he did not think it was of great relevance to yesterday's liquidation order.
Earlier, investment banker Tony Gavigan failed in his bid to be made a director in order to assess creditors' claims and send out an annual report to shareholders. He wanted to raise $3 million from a rights issue for an initial payment to creditors, working capital and to start litigation.
