Fin Review - 22/3/2010"Bendigo and Adelaide Bank is being pushed...

Fin Review - 22/3/2010

"Bendigo and Adelaide Bank is being pushed into a corner in its battles to ensure Great Southern investors keep paying their loans, with the bank forced to prove that hundreds of loans were validly assigned from the collapsed agribusiness.

NSW Supreme Court Justice Robert McDougall ordered on Friday that Bendigo provide evidence that it was indeed the owner of loans with 300 clients of financial planning firm Navra Financial Services. The bank consented to the orders.

The financial planning firm had demanded the evidence as part of a court stoush over whether the bank should be allowed to hand over the names of the 300 clients to a credit listing agency. The clients have all stopped repaying their loans which were taken out to invest in Great Southern's various agribusiness schemes. Great Southern collapsed last May and receivers are working on ways to recover investors' money.

The loans were originally given by a subsidiary of Great Southern but in April 2009, just weeks before the company went under, Navra clients received letters advising that management of the loans had been transferred to the bank. Daren Anderson, the lawyer acting for the financial planning firm, has been asking for proof of the transfer since last June.

"Unless they can prove the assignment of the debts to them they don't have a claim against any of our clients", Mr Anderson told the Australian Financial Review.

At 4:30 pm on Thursday, just before the Friday morning court hearing, Mr Anderson said he was served with 63 lever-arch folders filled with documents from the bank. At Friday's hearing, lawyers for Bendigo Bank said the evidence proving the assignments was in these folders. Mr Anderson was unconvinced and noted the bank had not provided any description of what was in the folders.

His client, Steve Navra, said he was keen to see what proof the bank had that it was the owner of the loans.

"Their [the bank's] actions are unconscionable in terms of harassing and pursuing myself and my clients", he said.

Bendigo Bank has $490 million worth of loans outstanding to Great Southern investors. Aside from Mr Navra's clients there are two other of investors resisting the banks efforts to get customers to repay their loans. At issue is whether Great Southern misled investors as to the viability and likely return of its agribusiness schemes."

Further on it continues -

"Bendigo has until April 6 to provide all evidence to support the transfer of the loans and the credit listing of Mr Navra's clients. The matter returns to court on April 16."