13 Mar 2014

Bridgecorp civil action settled

1:00 pm on 13 March 2014

Bridgecorp's receivers have agreed to settle their civil claims against the directors and their insurers for $18.9 million.

The claims were that the directors had breached their duties under the Companies Act.

As part of the settlement, the Financial Markets Authority (FMA) also agreed to drop its own legal action against Bridgecorp's directors.

The settlement means Bridgecorp's 14,500 investors will get an extra 4 cents in the dollar, taking their total return to 12 cents.

One of the receivers, Colin McCloy at accounting firm PricewaterhouseCoopers, believes the settlement is in investors' best interest since it provides certainty and took into account both the directors' available assets and the time and costs involved in going to court.

He denies the lawsuit was a waste of time.

"No, because we were aware of the insurance policy being $20 million. We weren't aware of the directors personal assets, so we filed the maximum claim possible.

"I can assure you that some of the directors have contributed money to the settlement."

FMA head of enforcement Belinda Moffat said the decision to drop the charges was not taken lightly and it believed it could not have achieved a better result.

"We looked at the level that had been achieved by the receivers. We also assessed the personal financial position of the directors to see whether we felt that any greater recovery could be achieved," Ms Moffat said.

"Having made that assessment, and having had the opportunity to engage with the receivers and discuss the matter, we're satisfied that this settlement does present the best outcome."

Bridgecorp owed $459 million to 14,500 investors when it collapsed in 2007. Some directors have since been jailed or placed in home detention for misleading investors.