LAWYERS for a $200 million-plus class action against the Centro group say it is unrealistic for the restructured company to claim it is not liable for losses of the old entity.
More than four years since the shopping centre owner and funds manager nearly collapsed under $5.7 billion in debt, what may be the biggest class action in Australian history began in Melbourne yesterday.
About 5000 investors - some of whom lost life savings - accuse Centro of misleading and deceptive conduct for not disclosing in 2007 that it had at least $3 billion of interest-bearing debt falling due within 12 months. When it did disclose the debt - as required by the Australian Securities Exchange - its shares plunged by 76 per cent in one day on December 17, 2007.
Centro has since restructured itself as listed retail property trust Centro Retail Australia, including the Centro Retail Group.
Its other entity, the more debt-ridden Centro Properties Group, was abandoned and the new entity claims it should not be responsible for the old entity's past mistakes.
Senior counsel Noel Hutley, representing the class action, ridiculed the "no liability" defence.
A common board and executive had overseen the two Centro groups, Mr Hutley said.
The court heard Centro dramatically increased its funds under management by $14 billion to $25.5 billion in the year leading up to its near collapse.
At least 50 lawyers packed into extra benches in the court, while more filled the public gallery.
The civil action is expected to run in the Federal Court for 10 weeks.