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Class actions planned against CBL and directors

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Two separate shareholder class actions have been launched respectively against failed New Zealand insurer CBL Corporation and its former directors.

Former CBL MD Peter Harris has hit out at the moves, saying today “little heed is paid to the interests of the parties that lost the money”.

“Given the scramble between the two litigation funders and the paucity of information coming from them, it seems to be more of one funder trying to beat the other to get at the prize,” Mr Harris says in a statement to insuranceNEW.com.au.

“It will be interesting to see how some of the parties handle their various conflicts between shareholders, advisers to the IPO, the company, and the creditors.

“The issue for me is that these litigation-funded cases are often just about money and settlements out of court, instead of going all the way to court for proper outcomes.”

The legal action against CBL is financed by Australian litigation funder IMF Bentham and will allege the company breached its obligations to keep investors properly informed about its French business.

CBL subsidiary CBL Insurance, which went into liquidation last November, was involved in the underwriting of French construction insurance.

“The claim will allege that at the time of CBL’s IPO in September 2015 and at all times up until the suspension of CBL shares in February 2018, CBL breached disclosure requirements imposed on it by the Financial Markets Conduct Act 2013,” IMF Bentham says.

“Specifically, it will be alleged CBL did not disclose information about its French insurance business in a timely and accurate way. The claim will allege that CBL’s breaches of the Financial Markets Conduct Act have caused loss and damage to CBL shareholders.”

The litigation funder plans to file the no-win-no-pay legal action next month in the High Court of New Zealand, Investment Manager Gavin Beardsell told insuranceNEWS.com.au.

“We are able to confirm we have signed both retail and institutional investors.”

Law firm Glaister Ennor will represent the shareholders in court.

The legal action against CBL’s former directors will be filed this month in the High Court in Wellington.

It is funded by New Zealand’s LPF Group on a success fee basis and is open to investors who purchased the IPO share offering in 2015 or acquired it subsequently.

The lawsuit “seeks to hold the directors of CBL Corporation to account for their actions and gain compensation for the shareholders who have suffered significant financial losses as a result of the collapse of CBL,” the class action website says.

“This class action is likely the only avenue now left available for shareholders to seek compensation for the losses that they have suffered as a result of the collapse of CBL.”

The CBL Class Action Litigation Committee is representing shareholders in all matters relating to the lawsuit.