Administrators’ report on Storm Financial expected today

A crucial report regarding the future of Storm Financial will be delivered today by the administrators of the group to its creditors.

The joint administrators of the group, Ivor Worrell and Raj Khatri of Worrells Forensic and Insolvency Accountants, will provide a report to creditors today about the group’s financial circumstances. This report is also expected to include an opinion about whether the Deed of Company Arrangement (DOCA) proposed by the former joint managing directors of the company — Emmanuel and Julie Cassimatis — will be in the best interest of creditors. The other option is to liquidate the company.

The Australian Securities and Investments Commission (ASIC) made the decision late last week not to make an application to wind up Storm Financial “at this stage”.

ASIC said it would not make any further comment about the matter until it receives a copy of the administrator’s report to creditors.

The Cassimatis’ are pushing for a proposal through the DOCA that would allow Storm to take legal action against the Commonwealth Bank of Australia (CBA). The Cassimatis’ are telling former clients through their personal website that they believe the proposal would “assist clients to achieve an outcome less expensively as a collective group, as well as the possibility of sharing in any successful claim Storm itself has against the CBA for destroying the business”.

The Cassimatis’ believe there are two sets of claims against the CBA, those from Storm and those that former Storm clients may have against the CBA.

The former founders say the DOCA will pay for the legal costs and will allow former clients to “participate in any residual funds Storm may be awarded for Storm’s claims”. They are discouraging clients from pursuing CBA through other group action by saying former clients will not receive all of the proceeds nor will they be able to share in any potential windfall of Storm’s.

The founders said there would be a ‘client committee’ that would be consulted during the process and would “have a say in any settlement considered”. The Cassimatis’ are urging their former clients to “work together to fight this battle” rather than “drawing our swords separately against each other”.

“We have a common enemy — let us work together to defeat the CBA for what it has done to all of us,” the statement from the couple said.

To be potentially eligible to vote on the DOCA former clients must to put in a claim to the administrators as a creditor of Storm. The creditors of Storm must vote to approve or block the DOCA. One of the group’s biggest creditors is the CBA.

The Cassimatis’ are also encouraging former staff to vote for the DOCA.

The couple say that a letter sent to former Storm staff by the receivers of the group, KordaMentha, implied that the group does not have the funds to fund their staff entitlements.

But the Cassimatis’ say this is not true, saying that the receivers “who are acting for the CBA” are attempting to “frighten you into voting against the DOCA in fear of not receiving your rightful entitlements”.

The Cassimatis’ say the DOCA “ensures the payment of any shortfall of your entitlements as a priority”.

To other creditors of the group, the Cassimatis’ say voting for the DOCA provides the best chance for them to recover the funds owed to them.

“Without the ability to obtain a settlement from successful litigation against the CBA, which we believe deliberately destroyed Storm Financial, and the lives of our clients and staff, you are unlikely to receive any funds.”