Settlement for ex-Bond company
The case began in 1995 after a consortium of 20 banks, including Westpac and Lloyds TSB Bank, provided various Bell companies with loans amounting to about $265 million.
Bell's liquidators claimed the loans had been improperly recovered by the banks when the Bell Group collapsed in 1991.
The banks had agreed in 1990 to extend the loans to allow the Bell Group to restructure and remain afloat, and in exchange were given guarantees and security over its publishing assets, shares in Bell Resources and other minor assets.
At the time, Bell Group was on the brink of insolvency.
In 2008, the banks were found by West Australian Supreme Court judge Justice Neville Owen to be liable as knowing recipients of the company's trust property.
The next year, Justice Owen ordered the banks to repay about $350 million in principal, which, together with compound interest, resulted in a $1.66 billion award to the Bell companies.
Last year, the Court of Appeal confirmed Justice Owen's major findings against the banks and increased the interest rate.
The banks paid about $718 million to the liquidators but appealed the interest rate.
On Tuesday, the parties announced the matter had been settled.
Despite standing to recover some part of the funds ultimately available for distribution to creditors, the banks have agreed to release their claims.
AAP
Frequently Asked Questions about this Article…
The long-running Bell Group court case related to Alan Bond’s Bell Group and began in 1995 when the companies’ liquidators claimed a consortium of banks had improperly recovered loans after the Bell Group collapsed in 1991. The dispute focused on about $265 million in loans and whether the banks acted as “knowing recipients” of the company’s trust property when they enforced guarantees and security.
A consortium of 20 banks was involved in the case, including major lenders such as Westpac and Lloyds TSB Bank. These banks had extended loans to the Bell companies and took guarantees and security over assets as part of a 1990 restructuring arrangement.
In 2008 a West Australian Supreme Court judge found the banks liable as knowing recipients of the Bell companies’ trust property. In 2009 the judge ordered repayment of about $350 million in principal, which, with compound interest, produced a $1.66 billion award. The Court of Appeal later confirmed the major findings and increased the interest rate.
The banks had paid about $718 million to the Bell companies’ liquidators, but they continued to appeal the interest rate that was applied to the original judgment.
No. The parties announced the matter had been settled for an undisclosed sum, and the exact settlement amount was not made public.
As part of the settlement the banks agreed to release their claims, even though they might have stood to recover some portion of funds ultimately available for distribution to creditors. This release resolves the litigation between the banks and the liquidators, which will influence how remaining funds are managed for creditors, but the article does not specify the financial impact.
The Bell Group case is important because it shows that banks can be found liable as knowing recipients when dealing with trust property in a distressed company, and that courts can order large repayments with compound interest. For everyday investors, it highlights legal and recovery risks in restructures, the importance of how guarantees and security are handled, and that lengthy litigation can significantly affect outcomes for creditors and stakeholders.
The legal action began in 1995 and is described as Australia’s most expensive and longest-running court case involving Alan Bond’s Bell Group. The dispute continued for decades with major rulings in 2008 and 2009 and appeals thereafter, before the parties announced a settlement on a recent Tuesday (the settlement amount was undisclosed).
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