Rare Coin creditor payout may be cut
An emerging wave of legal actions against The Rare Coin Company may reduce the chances of creditors of the collapsed business getting some of their money back.
Creditors were told at a meeting in Albany yesterday that liquidators may have to contest potential lawsuits from Rare Coin customers claiming sums running into hundreds of thousands of dollars each.
Liquidator Jennifer Low, of Sheridans Chartered Accountants. said the total value of claims was unknown. "They could be substantial," she said. Ms Low said the legal action added to uncertainty about how much could be recouped from the rare coins and banknotes owned by the company. Rare Coin owners Robert and Barbara Jackman had told liquidators the stock was worth $10 million.
The legal letters of demand related to promises alleged to have been made at the time of purchase.
The company owes creditors about $11 million, including $7 million for customers' stock that had been sold, according to liquidators' records. It also stored stock for clients valued at $237 million.
Ms Low told creditors a legal demand lodged in May against Rare Coin claiming $560,000 had been the final straw for the Jackmans, who believed the claim should be only $61,000. Other factors leading to the collapse included the introduction of restrictions relating to holding collectibles in self-managed superannuation funds. Details of Rare Coin's annual turnover given at the meeting showed the business' huge growth over a 13-year period before a sudden decline. Revenue grew from $600,000 in 1997 until peaking at $44.3 million in 2010. That slipped to $7.6 million by this year. There did not appear have been independent audits conducted.
Investors were also told secured creditor Westpac was set to seize the Jackmans' Albany home and other properties they owned that secured loans. The Jackmans did not attend yesterday's meeting.
Bank-appointed receivers PPB Advisory have assumed control from the liquidators of 1400 investors' stored coins and banknotes. PPB is also arranging top-up insurance for stock covered to only $145 million under Rare Coin's policy, but worth $280 million based on Rare Coin's internal valuations.
Liquidators are holding an information session for Perth creditors today at the Duxton Hotel.