A court case to determine whether directors’ and officers’ (D&O) liability insurance can be used to pay directors’ legal costs will be heard by the NSW Court of Appeal on January 29.

Lawyers for 2400 former owners of cattle and woodlot schemes run by Great Southern have challenged insurers that proposed using D&O cover to pay group directors’ costs defending class actions by 22,000 former shareholders.

Great Southern, Australia’s largest managed investment scheme, collapsed in 2009 after raising $1.8 billion from 43,000 investors.

Insurers hope to resolve confusion over the use of D&O cover resulting from the Bridgecorp case in New Zealand. The insurers represented are Chubb, Allianz, Chartis, Liberty Mutual, QBE and Wesfarmers.

The Bridgecorp case is still under appeal.