For those of you who have not yet heard, it is being reported today that the Bell Group litigation has been adjourned for six months and withdrawn from the High Court list pending the outcome of settlement negotiations. The High Court appeal had been due to be heard this month.
There is far more to this very complex and multi-faceted case, but broadly, in 1990 the Banks had agreed to extend the Group’s loans in order to allow it to restructure and remain afloat, in exchange for a range of securities. Perhaps the Banks were in too deep – some of the banks had already committed staggering percentages of their own capital base to the one client (see - of the appeal judgment). However at the time, Bell Group was on the brink of insolvency, and it was alleged that the Banks knew enough regarding Bell Group’s financial position and other relevant circumstances. When Bell collapsed in 1991, the Banks seized assets worth $280 million.
At first instance in 2008, the consortium of 20 banks including Westpac, the CBA, the NAB, HSBC Australia and a range of overseas banks including Lloyd’s TSB Bank had been found liable by his Honour Justice Owen – at the conclusion of his 2,600 page judgment – in all the circumtances, to pay approximately $1.58 billion to the liquidators of Bell Group (link).
The Banks’ appeal of that decision to the West Australian Court of Appeal substantially failed in August last year (link), and in broad terms, the Banks had been ordered to pay to the liquidators more than $2 billion.
Now, Australia’s reportedly most expensive and longest-running court case could finally, potentially, be drawing to an end. If the settlement negotiations prove to be successful, the liquidators of the Bell Group might finally be placed in a position to commence the process of making distributions to creditors, who have been waiting an exceedingly long time.