Class action targets CBL directors

Another class action related to the collapse of CBL Corp has been launched, this one with the support of the insurer's major shareholders and targeting CBL's directors.

Those shareholders include the largest institutional investor, Harbour Asset Management, Australia-based Argo Investments and broking firm Forsyth Barr.

The suit is being backed by New Zealand-based litigation funder LPF Group. Another suit announced this week is aimed at the company, which is in liquidation, and whichever insurance company it had, and is being funded by ASX-listed IMF Bentham.

IMF Bentham had claimed to have a number of CBL's institutional investors signed up but refused to name them and it doesn't appear to have any significant New Zealand-based institutions on board.

CBL, which had a market value of $747 million when its shares were suspended from trading on the NZX and ASX in February 2018, listed in 2015 after raising $125.3m from a float with 80.9 million shares sold at $1.55 each. The shares were valued at $3.17 when trading on NZX was suspended.

The representative shareholders in the new suit will be Harbour and Argo.

CBL's collapse “represents one of the largest corporate failures in New Zealand's history”, Harbour managing director Andrew Bascand said.

“Shareholders have lost everything. The directors of CBL need to be held to account and the out-of-pocket shareholders must be compensated.”

LPF's Phil Newland said he thought that ultimately only one of the two cases would proceed.

Asked how much his action is seeking, Newland says that will depend on how many CBL shareholders sign up and how much money each had lost.

The IMP Bentham-backed suit has engaged Philip Skelton, QC, as their barrister, and Glaister Ennor managing partner Jack Porus and his fellow partner Mitch Singh as their solicitors, while the LPF-backed suit has engaged Justin Smith, QC, Mike Colson and Jonathan Orpin-Dowell and law firm Meredith Connell as their solicitors.