Former Feltex directors still face class action

Feltex directors (from left) John Hagen, CEO Peter Thomas, chairman Tim Saunders, Peter David Hunter and John Feeney. Photo / Sarah Ivey

The former directors of Feltex Carpets have reached a settlement with the company's liquidators but still face a class action brought by aggrieved investors who collectively lost millions when the company collapsed in 2006.

Liquidators McDonald Vague announced on Thursday that they had reached a "full and final" settlement with the former directors - Peter Hunter, Peter Thomas, Tim Saunders, Michael Feeney and John Hagen - and that the terms of the settlement were confidential.

A case between the two parties was supposed to have started yesterday in the High Court at Auckland.

Liquidators were appointed to Feltex in December 2006 after its main lender, ANZ, placed it into receivership in September because of a $100 million debt. McDonald Vague said the settlement was entered into without any admission of liability by the directors.

The directors pleaded not guilty to charges brought by the Ministry of Economic Development alleging they had breached the Financial Reporting Act. The directors were acquitted last August.

Both the liquidators and the commission's case against Feltex centred on the company's six-month accounts to December 31, 2005, which incorrectly classified its debt with ANZ as non-current when it should have been current - meaning it was on call.

But the class action against the directors, which excludes Hagen, is centred on the company's float in 2004.

The investors claim Feltex's registered prospectus in 2004, the same year it floated, contained information that was misleading or wrong, or omitted to make information available that would have affected a person's decision to invest in the company.

The defendants have denied the allegations. Also targeted is Credit Suisse First Boston Asian Merchant Partners, Credit Suisse Private Equity and joint lead float managers First New Zealand Capital and Forsyth Barr.

An update on how the plaintiffs' case is progressing is due to be filed this month.


This story has been changed from an earlier version which incorrectly stated that the Securities Commission brought a case against the former Feltex Carpets directors when it was in fact the Ministry of Economic Development that charged them with alleged breaches under the Financial Reporting Act.