The day that broker Opes Prime agreed to a $95 million deal with ANZ, its chief financial officer had realised the company was insolvent, a court has been told.
Former Opes chief financial officer Anthony Iremonger said he knew that Opes could not meet its debts when required during a "perfect storm situation" in which the company was "getting slammed up against a wall by one or other aspects".
The court was told that at this stage, Opes Prime had a $200 million negative equity position due to problem accounts, including that of Sydney criminal lawyer Chris Murphy.
The comments were made during the trial of Opes director Julian Smith this week in the Victorian Supreme Court.
Mr Smith has pleaded not guilty to two charges of dishonestly breaching his duties as director of companies in the Opes group. Each charge carries a maximum jail term of five years.
Prosecutor Greg Lyon, SC, asked Mr Iremonger: "Did you form a view ... as to the solvency of the company or the ability of the company to meet its debts?"
Mr Iremonger replied: "On that day, and that would have been the day following [chief executive] Laurie Emini's departure from Opes Prime, ... we basically hadn't seen Julian Smith or [fellow director] Anthony Blumberg for 24 hours.
"We were pretty much in limbo. We had no idea what was going on, where they were, what negotiations were going on, and so based on all the evidence we had ... we came to the conclusion that the company would have been insolvent."
Mr Iremonger told the court that shortly after forming that view, Smith and Blumberg returned to the office and "basically gave me a rundown on the fact that they had reached some sort of settlement with the ANZ and were about to implement that".
Mr Iremonger described that agreement to defence counsel Mark Regan as a "lightning bolt".
Opes Prime, which had more than 650 clients, collapsed in March 2008 owing creditors about $630 million.
The Australian Securities and Investments Commission alleges that as Opes Prime teetered on the brink of collapse in March 2008, Mr Smith wrongly pledged assets belonging to two Opes Prime companies in order to secure the $95 million loan to Leveraged Capital, a company associated with Mr Smith and Mr Emini.
The trial, before Victorian Supreme Court judge Simon Whelan, continues.