Lawyer Pursues Class Action Against Feltex Directo
Christchurch, New Zealand, November 27, 2006--Garry Wakefield, a lawyer, has written to 8893 Feltex shareholders asking for $380 each to back a class action against former directors of the carpet-maker and the promoters of its 2004 float.
The move opposes the Shareholders Association appointing a liquidator who would be empowered to do the same.
A hearing on Thursday will decide on a liquidator's appointment. Although they disagree on the way forward, both sides are motivated by huge losses suffered by investors who bought the company from a Credit Suisse First Boston private equity fund in May 2004, for $243 million. Feltex was sold last month to rival carpet-maker Godfrey Hirst for about $140m, which covered its bank debt but left shareholders with nothing.
Auckland businessman Tony Gavigan, a former auditor who is also involved in lengthy legal action concerning the 1995 takeover of Southern Petroleum by Fletcher Energy, is seeking appointment as a Feltex director (the company has none). That will be determined at a court hearing on Wednesday.
Wakefield's letter informs shareholders they may be able to recover some losses, and proposes to use the Feltex shell as a plaintiff in legal action. It said Feltex's employee shareholders strongly supported a scheme of arrangement to restore solvency to the company.
"You must act now to help resist the misguided application to wind up Feltex brought by a Shareholders Association that holds just 1000 Feltex shares," it said.
Wakefield said the budget was realistic and the goals obtainable. "We'd like 10%-15% of the shareholders to contribute."
That would yield $300,000-$500,000.
Also on the legal team will be Gavigan's partner Patricia Mills, a bankruptcy and insolvency law barrister.
