Blue Star bondholders mull legal challenge over $80m loss

The bondholders have been left with nothing after the troubled print group was split into two and sold off, with the New Zealand arm sold to Tom Sturgess and the Australian business sold to Geoff Selig.

Neither sale included the bond debt, an outcome that would be particularly sour for bondholders after they approved a bailout of Blue Star in 2011, partly on the basis of revenue projections that turned out to be NZ$291 million short.

The chairman of the New Zealand Shareholders Association, John Hawkins, said he had been liaising with PMF Legal in Sydney and talking to bondholders to explore their legal options.

"The comments many have made indicate a great deal of unhappiness and anger with the situation," he told ProPrint.

PMF Legal principal Paul Fordyce said he had spoken to more than 100 bondholders, who are determined there be a full-blown investigation into Blue Star's demise.

"This is one of the biggest corporate collapses in New Zealand and it seems to have been kept really quiet," said Fordyce.

[Related: Blue Star angers bondholders]

He told ProPrint that the liquidators needed to conduct a thorough investigation to find out whether Blue Star traded while insolvent and why the financial forecasts made before the bailout vote had been so inaccurate.

Fordyce added that the investigation needed to determine how much responsibility for Blue Star's demise rested with senior management.

Sturgess said he was aware of Fordyce's action and that he was asking reasonable questions.

Fordyce also said he was considering legal action to have McGrath Nicol replaced as liquidators, because of an alleged conflict of interest due to its ongoing relationship with one of Blue Star's bankers.

However, McGrath Nicol partner Andrew Grenfell said his firm's appointment had been confirmed by the courts after no conflict of interest was identified.

"We have statutory requirements under the act, as does any liquidator. We have to satisfy our statutory obligations and we'll do that," he told ProPrint.

[Related: Ups and downs of Blue Star]

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