One.Tel liquidator tries a fresh tack
Sydney Morning Herald
Tuesday August 11, 2009
CREDITORS of the collapsed telephone company One.Tel have launched a fresh assault on the insurance company CGU in a battle which began in the NSW Supreme Court eight years ago and has been to the Court of Appeal three times and the High Court twice.The One.Tel liquidator, the Ferrier Hodgson partner Steve Sherman, is trying to prove that under a directors and officers insurance policy, CGU is liable to pay compensation that was ordered by the Supreme Court for breaches of directors' duties. CGU has argued since One.Tel collapsed in 2001 that the policy was invalid because all relevant information was not disclosed before it was issued.Mr Sherman's latest move is a suit launched in the name of the trustee for a former One.Tel executive director, Brad Keeling, which began in the Supreme Court on Friday.The brief directions hearing occurred just before a fourth trip to the Court of Appeal for a challenge in the name of the trustee for the former One.Tel chairman John Greaves. A two-day hearing of that began yesterday.Mr Keeling and Mr Greaves struck arrangements with their creditors in 2003 and 2004 respectively, after reaching settlements with the corporate regulator in a case alleging breaches of their duties to One.Tel.Mr Keeling agreed to an order that he would pay One.Tel compensation of $92 million. It was $20 million in Mr Greaves's case.One.Tel's creditors have so far received $273,000 from Mr Keeling's trustee, David Kerr, of RSM Bird Cameron, and $340,000 from Mr Greaves's trustee, David Watson, of Jones Partners.The appeal has potentially been complicated by the death of Mr Watson on July 18. Justice David Hodgson said yesterday the best course was for the three appeal judges to hear submissions from lawyers for Mr Sherman and CGU and to hand down a ruling, but not to make orders until, if necessary, a replacement trustee had been appointed.Mr Greaves's arrangement with his creditors ended in 2007, leading to a ruling by Justice Robert McDougall that Mr Watson's right to pursue CGU had lapsed.While Mr Sherman is appealing that ruling in the Court of Appeal, he has begun the suit in conjunction with Mr Kerr as a fallback.
© 2009 Sydney Morning Herald