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Public holiday creditors $150m

An extraordinary legal technicality and WA's Labour Day public holiday has left the receivers and creditors of Griffin Energy facing a $150 million shortfall on the sale of its Collie coal business to Lanco Infratech four years ago.

In a ruling which could trigger one of Australia's biggest professional indemnity claims, the appeals bench of the NSW Supreme Court has confirmed errors in the sale paperwork invalidated payment of the final $150 million due from Lanco's bank.

The decision centres around the contracted payment dates falling on non "business days" on the long weekend in WA.

The court findings do not affect Lanco's liability but there are serious doubts around the Indian group's ability to pay up.

KordaMentha, Griffin's former receivers, could not be contacted for comment late yesterday. But the firm is believed to be considering pursuing Corrs Chambers Westgarth, which drafted the sale paperwork, for the $150 million.

Corrs said the suggestion it could face a claim was "entirely speculative". "No claim has been made against the firm concerning the court case which relates to the ability of the plaintiffs to call on letters of credit," a Sydney spokeswoman said. "We cannot make any comment in relation to the court's judgment."

Under the sale agreement, the final instalment of $150 million was due on the fourth anniversary of the February 2011 sale and backed by three letters of credit from Indian bank ICICI.

The agreement put the amount secured by the letters as falling due on either February 28 (Saturday) or March 1 (Sunday), both non "business days" for the purposes of the agreement.

Subsequently, payment rolled over to Monday but that was also not a "business day" in WA because of the Labour Day holiday.

That left the $150 million due and payable only on March 3, yesterday. However, the letters of credit expired the day before.

The matter marks another chapter in Griffin's turbulent recent history.

The miner has struggled with high costs, weak coal prices and inconsistent financial support from Lanco since its purchase.

According to results filed with the Indian stock exchange last month, Griffin lost $44.5 million in the December quarter.

Griffin said the loss reflected the "highly distressed" nature of the mine at the end of last year.

However, it claimed it was now faring better after part of the proceeds from Lanco's sale of a power station in India allowed it to pay off some of Griffin's longstanding debts to creditors.

with Daniel Mercer