Retail investors stung by Norman Carey’s failed Westpoint empire could receive up to 50 cents in the dollar.
The publicly-listed DKN Financial Group has offered creditors $3 million for financial loss suffered at the hands of its now defunct dealer group, Deakin Financial Services (Deakin).
It is well short of the $16.6 million in claims brought against five former Deakin financial planners exposed to Westpoint products, but is a substantial increase on DKN’s earlier settlement offer of $650,000.
“If creditors resolve to accept the DKN deal and execute the proposed deed of company arrangement, creditors will receive between 40 and 50 cents in the dollar,” a spokesman from Deakin’s administrators Ferrier Hodgson said.
The deal is contingent on the full release of the company, its directors and authorised representatives from any liability.
DKN’s professional indemnity insurer QBE has agreed to pay a separate amount of $5.75 million to creditors in an out-of-court settlement.
Ferrier Hodgson had previously sought to win $9.6 million for creditors from QBE in the federal court.
DKN shut down its dealer group last November after it was discovered that Deakin planners channelled $23 million of client funds into the venture.
ASIC is investigating potential breaches of the Corporations Act by the company and its former planners.
DKN chief executive Phil Butterworth said the company had a moral obligation to creditors.
“While DKN considers that it has no legal obligation to pay this sum, it believes it has a moral responsibility to ensure that the creditors of DFS achieve a meaningful settlement of their Westpoint claims,” Butterworth said.
But Westpoint Investors Group president Graham MacAulay said it was a disgrace that investors would not get their money back in full.
“DKN have gone and expanded into other areas – why only give 50 cents in the dollar to investors?” MacAulay said. “I find it immoral. They’re either guilty or they’re not.”
DKN wants to clear its name over the Westpoint affair following its recent $120 million acquisition of the Lonsdale group and Zurich’s wrap business.
