Paul Weston, the court-appointed liquidator of One.Tel, said yesterday that legal papers were formally served on Murdoch and Packer as Weston seeks to recover A$132 million ($117 million) for the creditors of the bankrupt telecommunications company.
Lachlan Murdoch and Packer sat on the board of One.Tel. and their companies, News Ltd. and Publishing and Broadcasting Ltd., were One.Tel’s biggest shareholders. One.Tel collapsed after the two companies abandoned a plan to underwrite a A$132 million share sale.
“I consider the case against the defendants to be strong and the prosecution of the claim to be in the best interest of creditors,” Weston said in a statement. “The length of this final phase will largely depend on the actions of the defendants.”
One.Tel was liquidated after it ran out of cash in 2001, with more than A$1 billion of debt. Weston sued in May 2007, although the claim wasn’t served on the defendants until yesterday as he sought to raise money to finance the litigation. Weston said in an Aug. 5 report he secured funding for the lawsuit. The agreement was approved by a judge and terms were sealed, he said.
Litigation funders may take as much as 50 percent of the proceeds of a successful lawsuit, Weston said in a report in 2007.
“If the statement of claim is successful, the amount of potential recoveries could be as much as A$132 million plus interest and costs,” Weston said in the report.
Consolidated Media Holdings will “strongly defend the proceedings,” according to a statement by the company to the Australian Stock Exchange. The statement didn’t elaborate.
John Connolly, a spokesman for Lachlan Murdoch, declined to comment. Packer’s office didn’t immediately respond to a request for comment.
Following the collapse of One.Tel in 2001, Lachlan Murdoch and Packer said in a joint statement that they were angry, like all shareholders, and that they’d been “profoundly misled” about the company’s finances.
Since inheriting Australia’s biggest fortune in 2005, Packer used the A$5 billion sale of his father Kerry’s media empire to finance international expansion in gambling.
Also served with the lawsuit yesterday were Publishing and Broadcasting Ltd., now known as Consolidated Media Holdings Ltd., and News Ltd., a unit of News Corp.