Wellington, April 1 NZPA - The liquidators of failed carpet maker Feltex have today issued legal proceedings worth about $41 million against company's former directors.
The papers were laid in the High Court at Auckland against former chief executive, Peter Hunter, Peter Thomas, Michael Feeney, John Hagen and former chairman Tim Saunders.
Proceedings were necessary because the directors had shown no interest in resolving the claims since they were first made in March 2007, said liquidators, John Whittfield and Peri Finnigan, of McDonald Vague.
"We have been watching the other developments concerning Feltex with interest. The directors are certainly facing issues on all fronts, but frankly they should not be surprised," Mr Whittfield said.
"After all they presided over a substantial and spectacular collapse and a lot of people lost money. Several of the unpaid creditors of Feltex are no longer in business."
The liquidators counsel, Kerry Fulton, said that the claims were for up to about $41m in compensation and fell into three classes: failure to act in good faith and best interest of Feltex, failure to disclose to market and reckless trading.
Mr Whittfield said the liquidators believed that given the gravity of the allegations, the claims merited a court inquiry under the Companies Act.
"As with all of these types of cases the directors will no doubt fully contest the allegations and it will take time to resolve matters."
When Feltex was floated on the share market in 2004, more than $250 million was raised from mostly New Zealand investors.
Its shares were worth $254 million but all of that was lost when the company went into receivership in and subsequently into liquidation in 2006.
The Registrar of Companies has laid criminal charges in the Auckland District Court against the five directors, relating to information provided in the company's interim financial statements for the six-month period ended December 31, 2005.
They allege the failure to disclose the breach of a loan agreement -- the ANZ Bank debt facility -- that had not been remedied on or before the balance sheet date and the classification of the ANZ Bank debt facility as "non current", whereas it should have been classified as "current".
The directors have pleaded not guilty and say they are confident they can defend the charges.
Feltex shareholders are also trying to recover $212m from the company and those involved in the May 2004 Feltex float.
Feltex listed on the New Zealand stock exchange in 2004 at $1.70 a share.
In 2006 ANZ put Feltex into receivership and shares were worth just 3c.
It was then bought by Australian carpet maker Godfrey Hirst and hundreds of Feltex staff lost their jobs.
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