The Bell Group's liquidator has vowed to work with creditors to strike deals on sharing a $1.7 billion litigation bounty and to avoid decades of legal warfare.

Facing a five-year deadline to get creditor and court approval for carve-up deals, liquidator Tony Woodings said "there must and will be" attempts to put together schemes of arrangement acceptable to creditors.

The deadline was imposed as part of a deal struck with Bell's former bankers to settle an 18-year legal fight over the banks using dodgy mortgages to snatch assets from the Alan Bond-controlled group in 1991.

WA taxpayers have a major interest in the outcome of negotiations given the State-owned Insurance Commission of WA bankrolled the litigation and could receive up to half the proceeds if the cards fall its way.

ICWA needs consent from other creditors for it to receive its reward as litigation funder as part of schemes of arrangement.

Failing that, it will have to win an order from the WA Supreme Court under a provision of the old Corporations Act that provides special advantage for funding creditors.

However, this Corporations Act claim could be complicated by ICWA potentially being unlikely to receive any payment as an unsecured creditor given it was the holder of $150 million in junk bonds issued by Bell Group in the 1980s. As part of the settlement deal, the banks agreed to not participate in the carve-up of proceeds.

The winnings have been spread among 11 Bell companies. In the absence of schemes of arrangement, the money will be subject to an array of intra-company claims and distributions before it can be handed to any creditors.

This could involve myriad legal battles over competing claims and arguments, including those related to ICWA's legitimacy as a funding creditor.

Creditors, including a syndicate involving veteran litigation funder Hugh McLernon, could challenge ICWA's claim to more than half the proceeds.

In a note received by creditors this week, Mr Woodings revealed the deadline for a peace deal but also discretion to begin winding up companies earlier if negotiation proved pointless.

Under the settlement deed, he would have to start winding up if he was unable to propose schemes, or if he determined it was not in the "best interests" of Bell Group entities to do so.

Playing down the significance of the deadline, Mr Woodings told _WestBusiness _ it was likely he would be able to work out fairly quickly whether schemes were likely.

The West Australian

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