What is the status of claims against the directors?
We have previously advised that our confidential and privileged settlement discussions with SFL’s directors are effectively complete subject to the resolution of certain outstanding matters on an agreed timetable. This remains the position.
What about directors’ and officers’ insurance?
The directors have not obtained cover from any directors’ and officers’ insurance policy. This means that any settlement amount paid by the directors would need to come from their personal assets.
Why not sue the directors rather than settle with them?
Our job as receivers is to return as much money as we can to the investors. We have taken the following factors into account when considering settlement versus legal action:
- What assets are available to the directors, such as:
- directors’ and officers’ insurance
- personal assets
- Access to assets not held personally (such as through trust arrangements), on a voluntary basis, to fund a settlement amount
- Costs of taking litigation, including:
- that directors would use available funds to meet legal costs, reducing (even with successful litigation and a positive costs order) the amount available to the receivers
- legal costs that would be incurred by the receivers in undertaking the litigation
- The extent to which any settlement amount represents a discount of the expected value of the claim through litigation
- Litigation risk
- Enforcement risk (taking into account the ability of directors to pay, if required to do so)
- Timing of settlement versus timing of court proceedings.
Why can’t you disclose the settlement amount?
The settlement agreement has yet to be finalised. If it is finalised, an agreed statement (including the settlement amount) will be issued.
Will you accept a low settlement from the auditors to progress the receivership?
No. If we cannot obtain an acceptable settlement with the auditors, then we will pursue the claim already filed.
What is the status of claims against the auditors?
We have filed and served proceedings against BDO Spicers in relation to the audit of SFL’s 2007 financial statements.
What about the statute of limitations?
We have taken steps to ensure that the claims against the directors are not time-barred. The auditor proceedings were filed in time.
Why is the process taking so long?
We understand investors’ frustration at how long this process is taking.
The claims against the directors and auditors are complex. If acceptable settlements can be negotiated, this will be a shorter and less costly process than full-scale court proceedings. Meaningful settlement discussions require the directors and auditors to understand the basis of our claims and their risk of liability.
Settlement negotiations, however, have a finite timeframe. The available window for completing all settlement discussions is closing. We will report further by the end of March 2014.
When will I receive a further distribution?
The next distribution is dependent upon one or both of the below occurring:
- Recovering funds from the directors and/or auditors (whether through negotiation or litigation) and/or
- Realising some of the property assets remaining as detailed in our Receivers' six monthly report on the state of affairs dated 6 December 2013.