Shareholder class action against Ardent Leisure loses court bid for access to insurance policies
A class action by disgruntled shareholders against Dreamworld operator Ardent Leisure could be worth up to $300m according to lawyers seeking access to the company’s secret insurance policies.
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A potential $300m class action against Dreamworld operator Ardent Leisure has suffered a setback after being blocked from accessing secret details about the company’s insurance policies.
Shareholders are pursuing the theme park operator for alleged losses they suffered when the stock price fell after the fatal Dreamworld incident in October 2016.
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They claim Ardent misled investors about the safety measures and corporate governance standards in place at Dreamworld in the years preceding the accident causing Ardent’s shares to trade at an artificially inflated price prior to the tragedy.
Lawyers for the class action recently applied to the Federal Court for access to Ardent’s insurance policies and other company documents to determine if the class action had “commercial viability”.
They argued that Ardent Leisure's fortunes were sliding to the point that the company and its assets were worth less than the amount claimed by the class action.
They said they wanted access to insurance policies to see if there would be enough insurance to cover any potential payout to shareholders.
They also told the court litigation funders had agreed to back the next stage of the class action on the condition they obtained copies of the insurance policies.
Ardent opposed the move.
In denying access to the documents the judge yesterday said it was difficult to know yet if the class action, which was launched by Piper Alderman in June, was worth $100m, $200m or even $300m and Ardent Leisure was still solvent and retained net assets of around $290m.
He also said long held confidentiality around insurance policies should not be overturned.
Piper Alderman partner Greg Whyte said it was now “conferring with the funder about their position in light of the Court’s findings.”
“It was our concern to ensure Ardent has the capacity to meet the claim that is being advanced on behalf of shareholders and are encouraged by the Court’s finding that in this respect, Ardent’s liquidity is undoubted,” he said.
