The State Government has taken a carrot and truncheon approach to resolving a $1.7 billion battle over the Bell litigation proceeds, leaving the way open for peace talks but also for the jailing of dissident creditors.
In legislation tabled in State Parliament yesterday, Treasurer Mike Nahan plans to terminate legal rows and appoint an administrator to make recommendations to the State Governor about a cash carve-up.
Mr Nahan is using State powers under Federal corporations laws to create the special laws to wind up Australian Bell companies and then disperse the proceeds of a settlement deal struck in 2013. It provides no appeal rights. He said the alternative to the proposed laws was many more years of legal rows with litigation funders and distressed asset speculators.
The extraordinary step comes amid fears that the State Government-controlled Insurance Commission of WA could miss out entirely or wait for more than a decade to get any reward for spending $200 million-plus funding litigation over the 1991 collapse of Alan Bond’s Bell Group.
In a move clearly designed to ensure ICWA is rewarded for its gamble funding the case, the act provides “appropriate compensation” to creditors who bankrolled the litigation taking into account the funding provided and the risks they assumed.
ICWA’s claim for a big cut of proceeds is facing legal challenges in London by Dutch distressed debt investor Louis Reijtenbagh, who provided about $22 million in litigation funding in the late 1990s.
The proposed laws threaten up to five years jail, or a $200,000 fine, to anyone who plans, proposes or acts directly or indirectly to defeat or impede the objectives of the Bill.
However, it also allows the administrator take into account any agreements struck between creditors about the distribution of litigation proceeds. Respected former Federal judge Roger Gyles will oversee mediation between creditors in Singapore on Tuesday. Shadow treasurer Ben Wyatt said the Government’s Bill was very complex and highly unusual. “We are still looking through it,” he said.