OPES Prime clients, who are owed an estimated $500 million, will be lucky to get half their money back.
Administrators say it is too early to say how much they will get back but it is believed the most they can hope for is 50¢ in the dollar.
Even that is based on the assumption that the courts will allow the group's lenders to keep trading the stock. It is also based on the assumption that the lenders, ANZ and Merrill Lynch, continue to sell the stock at a discount of up to 1.5% to the market value.
Merrill Lynch and ANZ have refused to talk about the sell-off but have indicated that they are doing it at a small discount. They have also indicated that any losses will not be material to their balance sheets. It would, however, be a different story for the clients.
The case is still before the Federal Court, where a small group of Opes clients is seeking an injunction on the sale of margin loan shares bought through Opes Prime while the courts work out who owns them.
Under the Opes Prime contract, the clients become unsecured creditors — which means they have to wait their turn behind the banks — in respect not only to the shares that have been lent to them or bought with borrowed money, but also to the ones they have acquired with their own cash.
The company's administrator, Ferrier Hodgson, intends to place Opes Prime in liquidation. Ferrier Hodgson partner John Lindholm, one of three administrators of Opes Prime, said there was no chance of saving Opes Prime through a deed of company arrangement.
Mr Lindholm declined to be specific on how much investors could expect to get back.
"If the shares remain owned by the clients and the courts determine that the financiers don't own them, that's one position," he said. "If the financiers own the shares, depending on what they realise — the value we expect — you could be looking at a very substantial amount of money coming back."
That number may be revealed to creditors on Tuesday. At a meeting on that day, creditors are expected to be told what they are owed — which at this stage is $500 million: the sum of the loans deducted from the collateral provided — and how the sell-off by the financiers, ANZ and Merrill Lynch, is travelling.
Mr Lindholm said liquidating Opes Prime would probably take two years because of the complexity and potential legal issues. "It won't take that long to realise the assets but ASIC (Australian Securities and Investments Commission) might have continuing legal action. It may be that the creditors feel there are actions the liquidator should be encouraged to continue," he said.
The prospect of legal action made it likely that it would be years before investors got their money back and the collapsed stockbroker was wound up.
"The problem will arise if the equity in the financiers' securities books is tied up because of litigation," Mr Lindholm said.
"It may be that the assets are there but, if the litigation goes for years, it may be that we are in no position to distribute."
