Maddocks has lodged appeals which could have the effect of substantially increasing returns to about 1,000 investors in the now liquidated online stockbroking platform, located in Australia and New Zealand – Halifax Investments Services.
The appeals are being funded by leading dispute resolution finance company Omni Bridgeway. This is the first time a funder distribution order will be applied and tested under Australian insolvency law and is the first insolvency matter funded via a managed investment scheme (MIS).
These appeals are the first of their kind and are listed for a joint hearing, before the Full Federal Court of Australia and the Court of Appeal in New Zealand, on 23 September 2021.
The Federal Court of Australia and the High Court of New Zealand handed down judgements in May 2021. At first instance, the Courts were asked to consider what was the appropriate date to value investors entitlements on the Halifax platforms. This matter differed substantially from other insolvent stockbroking platforms, for reasons that the Administrators, and then subsequent Liquidators, allowed investors to keep their investments open and trading after the date of administration, in November 2018. In comparison, other matters involving online stockbroking platforms closed all investment positions on or very shortly after the date of administration.
Since Halifax went into administration in 2018, the value of the Category 1 investments has risen from $82 million to an estimated $170 million in April 2021 – a net increase of nearly $90 million. That increase was a result of those Category 1 investors maintaining open investment positions.
The appeals are brought to consider 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. If successful, the appeals will benefit those Category 1 investors significantly.
Maddocks represented the investors, known as ‘Category 1’ investors, being those investors who have kept their positions open and who received a higher valuation on their investments, when compared to their value as at the administration date, with a team led by Partner Danielle Funston (Picture).
Involved fees earner: Danielle Funston – Maddocks;
Law Firms: Maddocks;
Clients: Loo Choo Boon ;