Court resumes hearing into GSI rescue efforts

THE Federal Court resumed its hearing into the future of troubled lender Gippsland Secured Investments Monday afternoon after the local investor group, attempting to save GSI, advised the court on Friday of its agreement to fund costs for a two-week period.

The fight to save GSI from receivership was almost derailed on Thursday when the Federal Court declined to grant an extension to the rescue effort unless the rescue group agreed to cover the legal costs of all parties for the next month.

One of the legal firms involved had refused to cap its fees and the costs could rise to more than $500,000 over the month.

That doesn’t include the legal costs already incurred by GSI or the rescue group in the four weeks they have been fighting to save the company.

The rescue group has raised capital of more than $7 million from the business community to support the rescue effort.

The Gippsland financial institution, which manages $143 million in funds across 3500 accounts, suspended access to GSI accounts on July 10, in consultation with the trustee, the Trust Company Ltd.

Counsel representing GSI, the Trust Company Ltd and the GSI rescue group, which includes local businessmen Duncan Johnston, Richard Rijs, Ray Hack, John Dahlsen, Bill Dahlsen and Harry Rijs, attended the hearing before Justice Kathleen Farrell in the Federal Court in Sydney.

Counsel from the Australian Securities and Investments Commission also attended.

The rescue group had sought an additional 30 days to restructure GSI with a new board of directors and new management systems.

Rescue group members Bill Dahlsen, Duncan Johnston, Ray Hack, Richard Rijs and Harry Rijs also committed to act as directors to help steer the company though the period of change.

Former ANZ Bank director John Dahlsen has offered his services pro bono as a special advisor to the board.

Last week more than 120 investors joined the rescue group in requesting that GSI and the Trust Company call a meeting of debenture holders to be held in Bairnsdale as soon as possible, which would allow them to have a say on the future of the business.