Thousands of investors in failed plantations group Great Southern face years of financial hardship under a controversial settlement approved by the Victorian Supreme Court yesterday.
The $23 million settlement, flagged in July, resolves a class action by 2000 investors led by Macpherson and Kelley Lawyers and targeting Bendigo and Adelaide Bank's involvement in Great Southern's schemes.
The class action had sought to void more than $300 million of loans taken out with Bendigo and Javelin Asset Management to fund the schemes on the basis that investors were misled by Great Southern, which collapsed five years ago.
The deed of settlement, however, confirms the loans are valid and enforceable, while waiving accrued penalty interest on overdue borrowings.
About $20 million of the $23 million will be paid to Macpherson and Kelley Lawyers to cover its costs, with just $3 million to be distributed among tens of thousands of investors who sunk nearly $2 billion into Great Southern.
Victorian Supreme Court Justice Clyde Croft said while the settlement delivered only a modest payment to investors, they would have got nothing if the class action had proceeded to judgment.
Bendigo said while it preferred investors repaid the loans now, it would not call in the debt for at least 30 days as a sign of its continued "goodwill".
Chief executive Mike Hurst said the bank "was committed to helping borrowers to meet their obligations to repay their loans".
"Whilst we'd prefer prompt payment of the debt, we understand some borrowers might not be in a position to pay the full amount in that timeframe," Mr Hirst said.
"We're happy to work with people, and even refinance loans where that makes sense, to ensure they can meet their obligations without hardship.
"We understand this has been a difficult process for all parties concerned, but we remain committed to providing a high standard of service and working with people to ensure the loans are repaid in full over time."