Omni Bridgeway funds appeal to recover tens of millions of dollars for 1000 Halifax victims
SYDNEY, 13 September 2021: Around 1000 ‘Category 1 Investors’ in Halifax Investment Services Pty Ltd (in liq) and Halifax New Zealand Limited (in liq) (together, Halifax) will have the opportunity to recover tens of millions of dollars more of their funds caught up in the collapse of the stockbroking platform after Omni Bridgeway agreed to fund appeals over recent judgments in the Australian and New Zealand courts.
Omni Bridgeway, a leading dispute resolution finance company, will fund appeals brought by Mr Choo Boon Loo (a ‘Category 1 Investor’) for the benefit of all so-called ‘Category 1’ investors of Halifax (Representative). Danielle Funston, an insolvency specialist at Maddocks Lawyers, will be acting for the ‘Category 1’ investors in the appeals.
‘Category 1’ investors, in broad terms, are those investors whose investments will be higher if valued at a date later than the Administration Date.
There are more than 1000 ‘Category 1’ investors, who collectively held $82 million worth of investments at the time Halifax went into administration in November 2018. The value of their investments has since substantially increased in line with the performance of financial markets.
At 30 June 2020, the value of investments held by ‘Category 1’ investors had risen to approximately $138 million. At 30 April 2021, the value of those investments was estimated at almost $170 million.
The value of investments by some other categories of investors in Halifax has fallen since the administration date. When final distributions are made, these investors stand to benefit from the performance of ‘Category 1’ investors’ investments should the appeals funded by Omni Bridgeway not be pursued or are unsuccessful.
The liquidators of Halifax – Morgan Kelly and John Quinlan of KPMG – have sought directions and advice on a number of questions in relation to the distribution of funds held on trust by Halifax for its investors. The proceedings have been held concurrently in the Federal Court of Australia and the High Court of New Zealand.
In their judgments on 19 May 2021, the Federal Court and the High Court concluded that it was appropriate to value investors’ investments, including ‘Category 1’ investors, as at the administration date in November 2018, rather than a later date, which would have taken into account changes in the value of ‘Category 1’ investors’ investments.
The appeals to the Full Court of the Federal Court and the NZ Court of Appeal concern one discrete question: whether the courts were correct in concluding that the liquidators were justified in valuing investors entitlements to the funds held on trust as at the administration date.
Omni Bridgeway has registered a managed investment scheme (MIS) with the Australian Securities and Investments Commission for the purpose of funding the Representative.
In the event of a successful determination of the appeals, the Representative intends to bring an application for a funder distribution order. This would have the effect of requiring all Category 1 investors to contribute a share of the increased value of their distribution entitlements to c Omni Bridgeway’s in return for Omni Bridgeway’s funding of the appeals.
This represents the first time a funder distribution order will be applied and tested under Australian insolvency law.
Further information and a product disclosure statement in respect of the MIS can be found at the following website:https://portal.omnibridgeway.com/cases/detail/halifax-investment-services