Westpoint victims may launch a $16 million litigation claim against one of the largest financial planning groups linked to the failed property scheme.
Creditors of Deakin Financial Services will meet in Brisbane today to decide if they will wind up the dealer group and pursue its parent company DKN Financial Services Group.
The litigation would relate to alleged breaches of DKN's management agreement with Deakin, which was handed over to administrators last year.
Deakin financial planners put $23 million of clients' money into various Westpoint mezzanine schemes before Norman Carey's empire collapsed in November 2005.
Investors have claims totalling $16.6 million against five of the planners.
Deakin's administrators Ferrier Hodgson and ASIC are obtaining legal advice about the claim.
The listed company disputes the validity of the claim and has written to ASIC and the administrators denying any wilful misconduct or gross negligence.
DKN chief executive Phil Butterworth could not be contacted yesterday.
In a letter to creditors last week, administrator John Lindholm said if Deakin is wound up the liquidator will retain the right to pursue DKN for the $16 million.
He said the dividend payable to creditors in a liquidation scenario is likely to be between 23 and 30 cents in the dollar before litigation commenced.
DKN has sought to offset legal action and increased its contribution to creditors from $650,000 to $3 million for their losses.
The company's professional indemnity insurer QBE has agreed to stump up $5.75 million.
If creditors choose to accept the deals from DKN and QBE they are expected to receive between 40 and 50 cents in the dollar.
Ferrier Hodgson has recommended that creditors accept the deals and not pursue legal action.
"I am of the view that the DKN payment is a fair and reasonable settlement," Lindholm said.
Investors are pursuing separate litigation actions against several former Deakin agents.
