Liquidator KordaMentha has triggered a vicious circle of court action as it places legal pressure on investors in failed forestry group Timbercorp.

The company is seeking to recover loans investors took out with Timbercorp Finance, which collapsed in 2009.

Now law firms including Slater & Gordon are investigating possible action against financial planners who earned $92 million in commissions advising clients to invest in Timbercorp’s managed investment scheme.

The forestry company paid planners and advisers commissions of up to 10% of investments, plus an annual trailing commission of 0.5% on loans taken out by clients.

About 14,500 investors borrowed a combined $477.8 million from ANZ to put into Timbercorp before the managed investment scheme collapsed. 

In April the High Court dismissed a class action against Timbercorp when it denied investors leave to appeal against an earlier Victorian Court of Appeal decision upholding the validity of the loans.

Since them KordaMentha has lodged 79 lawsuits in the Victorian Supreme Court against investors and 649 final demands were issued last month. The company told insuranceNEWS.com.au today that it expects to issue 250 more writs ”in the next four weeks”.

“This matter has been to the Supreme Court, the Appeals Court and the High Court,” a KordaMentha spokesman said. “The debts are now payable. More than half the borrowers have paid their loan, as they are legally obliged to do.”

The spokesman told insuranceNEWS.com.au the liquidator is prepared to consider pleas of hardship from investors, and in genuine cases may offer a 15% discount.