MG19, Yodo and jefftag I agree with your reasons for not joining the class action and was holding off on doing so to see if the company could shed some light on their situation with an update. So far they have provided nothing meaningful and I am going to join this class action on the last day today, as I meet the conditions.
I think the below story today on Babcock is likely to be similar story for ARR. I do not care about receiving a possible payout from litigation I would rather see the Directors and management held accountable. I think ARR has been as quiet as possible so their story does not get in the press and its also helped that they are a smaller less known company.
BABCOCK & Brown directors may have breached their duties and the corporations law by operating the investment bank while it was insolvent, and failing to get shareholder approval for a $40 million loan to controversial broker Tricom Equities.
These explosive findings are contained in a 110-page report prepared by administrator Deloitte and obtained by The Australian.
Other claims include conflicts of interest, inadequate disclosure to investors, key risk management weaknesses, unfair preference payments to two group executives, and possibly misleading statements in investment documents.
The report, which will be made available to creditors on Monday, concludes that Babcock's business model was skewed in favour of management.
"In 2006 and 2007 approximately 50per cent of profits were used to fund remuneration. The remuneration policies put in place by the board served to encourage a culture of risk taking and rewarded short-term performance." Related Coverage
The report recommends the company be placed in liquidation and estimates that subordinated noteholders will get no more than 1.5c in the dollar and shareholders will receive nothing.
The report confirms discussions with litigation funder IMF to help pursue recovery actions to increase the return to creditors.
"To the extent that the conduct of previous BBL directors may be actionable, parties who have suffered damage may be able to claim against the directors' and officers' insurance policy," the report says.
The collapse of Babcock was spectacular. After listing in 2004 at $5 a share with virtually no assets, it took less than three years to soar to $34.78 a share, giving it market capitalisation of $10bn, with assets under management reaching $70bn globally, and debt across the empire totalling more than $40bn.
From the outset, BBL was dubbed "mini-me", a Macquarie Bank impersonator, and Phil Green and Jim Babcock, the co-founders, took advantage of the comparison.
ARR Price at posting:
2.4¢ Sentiment: None Disclosure: Held
