Investors with failed agribusiness provider Great Southern have launched a class action against Bendigo and Adelaide Bank (BABL), in an attempt to recover losses from the venture.
A statement of claim issued by DC Legal on behalf of investors against BABL, which currently holds the loans, alleges that the Great Southern Group made false and misleading claims in its product disclosure statement (PDS) such as promoting unattainable woodlot yields and failing to report the true position of the managed investment schemes (MISs).
The group also offered investment in the schemes and loans in order to invest up until the month of receivership, according to the statement.
DC Legal solicitor Bruce Dennis encouraged other Grout Southern investors to join the class action.
Since at least 2004, the Great Southern Group was relying on sales from the following year’s MIS sales, which Dennis described as having a ponzi-like character, where new capital is constantly required to prop up previous projects.
Investors were unable to make an informed decision regarding the investments and would not have taken out the loans and invested in the schemes if the true position had been stated, Dennis said. About 260 investors are asking the Federal Court to set aside loans and to be reimbursed for all costs.
“BABL has threatened to commence action against borrowers from GSF having acquired these purported loans. BABL has even threatened the investors with bankruptcy,” Dennis said.
This is the only nationwide class action on the Great Southern matter, Dennis said, although a smaller class action was filed by Macpherson + Kelley lawyers in the Victorian Supreme Court in May this year.
Along with the Great Southern Group, three formers directors have also been named as respondents in the action. They are John Young, Cameron Rhodes and Phillip Butlin. The matter is due to go before the Federal Court on 22 October.
A response from BABL said there was nothing new in the statement of claim, which the bank described as “hopelessly inadequate”.
It covers the same ground as the Macpherson + Kelley action, and BABL has always acted within the letter and spirit of the law relating to loans provided to investors in Great Southern MIS and will vigorously defend the new action, according to BABL managing director Mike Hurst.
Although DC Legal claims to be acting on behalf of up to 2,000 investors, only 230 of its clients have Great Southern loans with BABL, Hurst said.
