LAWFUEL – Legal Career & Law News – Litigation on behalf of investors in failed carpetmaker Feltex is set to continue, with Christchurch lawyers finalising due diligence on funding for the litigation.
Potential claimants’ lawyer Gary Wakefield told LawFuel that his firm was in the final stages of completing due diligence with an Australian-based litigation financier. The financiers would take a percentage of any litigation success. No lenders in New Zealand presently provide litigation funding of the kind sought by Mr Wakefield in the Feltex claim.
Feltex was floated on the sharemarket at $1.70 a share in 2004 and last September was put into receivership. It was sold in October to Australian carpetmaker Godfrey Hirst as a going concern, with the purchase price sufficient to repay Feltex’s bank facilities.
Thousands of small shareholders lost over $250 million – an average of $29,400 each – when the shares became worthless. Mr Wakefield’s firm represents over 650 shareholders.
The lawsuit will seek as much as $250 million from directors, vendors, issuers and promoters involved in the public float of Feltex.
Credit Suisse First Boston bought Feltex in 1996 for $19.5 million, then sold it to a related private equity firm, CSFB Asian Merchant Partners which then floated it.
The float was lead-managed by First NZ Capital, which has always had close ties to CSFB, and Forsyth Barr, and co-managed by ABN Amro and Macquarie Equities.