The Federal Court has approved a $29 million class action settlement negotiated by law firm Slater & Gordon (S&G) on behalf of more than 5000 investors who lost money when Fincorp Investments collapsed in 2007.
S&G said the money that investors would receive under the settlement was in addition to funds already recovered by secured investors through the liquidation process.
It also represented the first time that unsecured investors recovered any money since the collapse of Fincorp.
The proposed settlement will pay between 6 cents and 75 cents of outstanding capital on both secured and unsecured notes.
“The collapse of Fincorp in 2007 came as a horrific shock to the many, mainly older, investors who thought they had invested in a low-risk company,” S&G litigation lawyer Odette McDonald said.
“Many small investors from across Australia invested in Fincorp because they mistakenly thought that it was as safe as investing in a bank. Clever marketing tactics and high-profile endorsements were used to rope-in investors.”
S&G pursued compensation for investors from Sandhurst Trustees, the appointed trustees of Fincorp. The law firm alleged Sandhurst had breached its duties as trustee for investors under the Corporations Act.
The class action settlement covers investors who had purchased secured and/or unsecured notes issued by Fincorp on or after 7 December 2004 and held those notes as at 23 March 2007, or who purchased secured and/or unsecured notes prior to 7 December 2004 and rolled the investment over after that date.
Investors holding secured notes have received 55 cents in every dollar originally invested as part of the liquidation and receivership of Fincorp. They are due to receive a further 1 cent.
