Feltex case has gathered momentum, says growing group of litigants

Feltex director Peter Thomas and chairman Tim Saunders. Photo / Dean Purcell

The number of investors suing the former directors of Feltex Carpets has swelled to more than 2800 and they say the case has "gathered momentum".

Investors are attempting to take a class action against former Feltex directors and allege the company's prospectus in 2004 - the year it floated - contained information that was misleading or wrong, or omitted to make information available that would have affected investment decisions.

Feltex collapsed in 2006, causing 8000 investors to lose millions of dollars.

Investors are seeking a refund of the purchase price of their shares, plus associated interest and costs.

The defendants, who have denied the claims against them, include former chairman Tim Saunders, former chief executive Sam Magill and former directors John Feeney, Craig Horrocks, Peter Hunter, Peter Thomas and Joan Withers. Former director John Hagen is not involved in these proceedings.

Also targeted is Credit Suisse First Boston Asian Merchant Partners, which offered Feltex for sale, Credit Suisse Private Equity and joint lead float managers, First New Zealand Capital and Forsyth Barr.

A statement from the claimant group said it now numbers more than 2800, up from 1800 in August last year.

A consolidated claimant list was filed in the High Court at Christchurch last week. The statement said the case has "gathered momentum with lists of documents for the discovery process to be provided shortly".

This follows a ruling on March 9 last year which lifted an interim stay of proceedings over the class action.

In her decision, Justice Christine French said although some evidence lacked precision, the claimants' case was arguable and there were serious questions that needed to be tried.

She also said if the stay of proceedings was allowed to remain in place, potentially crucial evidence and financial records could be lost as the period requiring third parties to keep this information was due to expire.

Although Saunders, Feeney, Hunter, Thomas and Hagen were found not guilty of Securities Act breaches in 2010, Justice French said this decision was made in a different context and did not hold "significant weight" in determining whether the claimants' case was arguable.

The Feltex directors have lodged appeals against parts of Justice French's ruling which are due to be heard on August 15 and 16.