Five Star investors look to sue directors

Investors owed $42 million after the collapse of the Five Star Finance group of companies are looking at suing the directors.

The civil action is being led by the liquidators of Five Star Debenture Nominee Ltd, Gerry Rea Partners.

The liquidators say they have a date for a trial in May 2011, and are now seeking expressions of interest from the investors in backing the legal action.

Fourteen of the 200 investors have already said they are interested.

The Five Star group collapsed in 2007 and owes depositors more than $90 million. Earlier this year directors Anthony Bowden, Marcus MacDonald and Nicolas Kirk were banned from holding company directorships for five years.

De facto director Neal Williams was also banned for the same length of time.

The directors face about 140 criminal charges brought by the Companies Office.

Five Star Debenture Nominee is a related company that invested $42.5 million in Five Star Finance.

Most of the 200 investors in Five Star Debenture Nominee were acquaintances of the directors who entrusted the businessmen with their savings. They were told all money would be invested in secured consumer loans. But the liquidator says at least $14.5 million was unsecured loans to parties related to the Five Star group.

Liquidator Paul Sargison said the civil action against the directors was worthwhile.

"I'd be surprised if they don't have [money].

"They're still living in fine houses and defending every action that's being taken against them."