Court scrutiny for directors

The role of directors in failed Taieri Plains fertiliser company Featherston Resources will be scrutinised in the Supreme Court of New South Wales in Sydney today.

More than 200 investors poured $15.1 million into the diatomite manufacturing venture in Dukes Rd near Mosgiel over 16 years, but in spite of expectations of annual turnover of millions of dollars, it was placed in receivership in January; one report estimating creditors were owed $A4 million.

A subsequent bail-out offer by Plaman Group to buy Featherston for $A4.8 million ($NZ5.2 million) has been accepted by the creditors, but leaves shareholders in the cold, which a group of shareholders wants overturned.

A hearing is scheduled to begin in the Supreme Court of New South Wales in Sydney, starting today.

The Otago Daily Times has obtained a court application filed by Peter Ashcroft, of Sydney-based Ashlaw Legal Services, which is representing 13 shareholders, and questions the actions of directors, before and during the receivership proceedings.

Asked to appear before the Supreme Court as the first three of 11 defendants are Emma Weston, a lawyer and Featherston's managing director and a director and shareholder, lawyer Simon Kember, a shareholder and director, and lawyer Timothy Goodacre, shareholder and director.

Other individuals are identified as defendants, as are Australian-registered companies including FRCN Pty Ltd and Plaman Group Pty Ltd.

Mr Ashcroft is looking for ''final relief'', in a declaration that Ms Weston, Mr Kember and Mr Goodacre and others ''are liable to pay Featherston any profits, alternatively damages and equitable compensation'', under alleged breaches of the Corporations Act or ''general law and fiduciary duties to Featherston''.

Mr Ashcroft wants the rescinding of a convertible note deed; a $A1.72 million loan to Featherston by FRCN Pty Ltd, which gained a charge over Featherston's assets, and would be repaid by the Plaman Group offer, which would in turn own Featherston.

Mr Ashcroft says Ms Weston, Mr Goodacre and Mr Kember used payments from Featherstone ''to fund their participation in the convertible note''.

''At no point, at any of the directors meetings in which the convertible note was discussed did Weston, Goodacre or Kember record their interests in the Featherston register of interests,'' Mr Ashcroft said in the application to the Supreme Court.

Part of the 42-page application covers aspects of the financial trading year to March 2012, where Mr Ashcroft said Featherston had operating revenue of $62,020, including fertiliser sales of $51,363 and that expenses that year were $4.03 million.

Under ''remuneration and other benefits'' received by Ms Weston during the 2011 and 2012 financial years, Mr Ashcroft said she received a total $721,566, plus exercised options on 500,000 shares.

Prior to Featherston's receivership, Mr Ashcroft claims there were multiple investment offers ''rejected or stymied'' by Mr Kember, Mr Goodacre and others; including an offer of a $5 million loan plus $20 million option, and another of $2 million, plus $10 million more if Featherston listed on a stock exchange.

-simon.hartley@odt.co.nz

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