The controversial founders of Storm Financial Group, Emmanuel and Julie Cassimatis, want to regain control of Storm and use the company’s shell as a vehicle to sue the Commonwealth Bank, which they blame for causing the collapse.According to a report on Business Day, the couple has told Storm’s administrators, Ivor Worrell and Raj Khatri of Worrell’s Solvency and Forensic Accountants, that they plan to propose a deed of company arrangement at a creditors meeting to be held later this month.
While the administrators are yet to see the proposal, it is expected that the deed would involve asking creditors to fund legal action against those parties the Cassimatises blame for the collapse. This is primarily Commonwealth Bank, whose subsidiary Colonial Geared Investments provided margin loans for many Storm clients.
The Cassimatises says Commonwealth Bank’s failure to warn clients that their accounts had fallen into deficit helped caused the collapse of Storm. But Commonwealth Bank says the management of the margin loans was the responsibility of Storm.It is unclear whether the proposal for a deed of company arrangement will get approval from creditors, who are owed more than $88 million. More than half of the creditors would have to approve the deed, by number and by amount owed. Commonwealth Bank, which is owed $27 million as a secured creditor, could block the deal by itself.
Commonwealth Bank is also likely to face legal action from a group of Storm Financial clients who are preparing a class action against the banks involved with the group’s collapse. More than 700 clients have already joined the class action.The Storm Investors Consumer Action Group, which represents former Storm clients, is also lobbying for a Parliamentary inquiry into the collapse.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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