Claims against the Company and limited insurance monies

During the course of the liquidation of the Company, the liquidators became aware of over 100 claims which had been made by former clients of the Company and which had been received by the Company’s insurer over several years. The Company’s remaining assets comprised certain limited claims-made Civil Liability Insurance Policies that were issued by the Insurer over a number of years.

Significantly, there were several complicated issues including the following:.

• The value of the claims that had been made far outweighed the total financial limits of insurance cover under the policies
• a large number of the claims were statute barred;
• a number of Court proceedings were stayed or were in abeyance until the outcome of the application for judicial advice.

It was in this context that the Insurer proposed to the Applicant liquidator a voluntary settlement scheme whereby claims that have been received would be assessed with a view to enabling the former clients to be paid some money from the proceeds of insurance. In order to consider whether to accept the Insurer’s offer, the Applicant liquidator sought judicial advice pursuant to what was formally contained in section 479(3) of the Corporations Act.

As part of the proceedings before the Federal Court, the Court ordered that advertisements be taken out in certain newspapers inviting:

"any person who considers they may have a claim against the Company arising from alleged breach of contract, negligence, breach of duty, including fiduciary duty, misleading or deceptive conduct or other wrongful conduct in the provision of financial planning advice to submit a claim to [the Liquidator’s] solicitors by (a specified date)".

At the same time, an Insurance Monies Distribution Scheme document including deeds of release was developed and approved by the Court.

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