Storm Financial support base alive and well

The hearing between the Australian Securities and Investments Commission (ASIC) and Storm Financial continues in the Federal Court in Brisbane today.

ASIC has taken the unusual move of circumventing the ordinary process of winding up a company in administration in order to avert any possible revival of the company through a proposed Deed of Company Arrangement (DOCA).

The founders of Storm Financial, Emmanuel and Julie Cassimatis, had proposed the DOCA in order to give them scope to use Storm funds to take legal action against the group’s former main funder, the Commonwealth Bank of Australia (CBA).

The DOCA would have been voted on at the second meeting of Storm’s creditors on Monday this week, but ASIC believes material circulated by the Cassimatis’ regarding the DOCA was so misleading that it would be safer to seek to have the company liquidated without a vote from creditors.

Storm’s administrators, Worrells Solvency and Forensic Accountants, had already recommended to creditors that the group be placed in liquidation. The CBA is also one of the major creditors of Storm, and would have held a significant vote on the DOCA arrangement.

But despite that, concerns remained that Storm and the Cassimatis’ had enough loyal supporters to allow the DOCA a chance of getting off the ground.

Slater & Gordon lawyer Damian Scattini, who is acting on behalf of former Storm Financial clients, said this was a possibility ASIC wanted to head off.

Scattini said the Cassimatis’ still have a strong support base who believe the Cassimatis line that all the fault for the collapse of Storm and the financial damage of its clients lies with the banks.

Scattini believes there is culpability in both camps.