One.Tel creditors have moved to oust the company's court-appointed liquidator after having incurred more than $11 million in legal costs and fees to date.
Special Purpose Liquidator (SPL) Paul Weston was engaged in December 2003 to investigate the cancellation of a $132 million share rights issue (RRI) on 29 May 2001 - the day One.Tel declared insolvency.
The investigation was delayed by legal proceedings, and only resulted in One.Tel shareholders James Packer and Lachlan Murdoch being served with a lawsuit on Monday.
Weston said the lawsuit was "in the best interest of creditors".
The lawsuit was backed by an anonymous funder who would receive an undisclosed sum if successful.
While he was "not in a position to divulge terms and conditions" of the funding arrangement, Weston said the funder was entitled to a reward for taking on costs and risks of the lawsuit.
"This is a significant claim; it is going to produce, on success, a significant amount for creditors," he told attendees of One.Tel's Annual General Meeting of creditors this morning.
Creditors were sceptical, with One.Tel founder Jodie Rich questioning the SPL's decision to undertake what may be "very expensive and very long court action against major players, in place of settlement".
Rich was also concerned about the SPL's invoices, which comprised $3 million in fees and $8 million in legal costs as of February 2010.
"You haven't even started the case ... How can you make us feel that the $11 million deserved to be spent," he said, noting that his own four-year case against ASIC had cost him $9 million.
Rich, who was owed $2.1 million, criticised the SPL's "lack of transparency" and demanded details of the funding arrangements be divulged.
His demand followed a failed May 2010 application to the NSW Court of Appeal by creditors John Deloughery, Gary Philips and Singtel Optus' Barbara Galloon, who also sought access to confidential funding arrangement material.
SPL Weston argued that the arrangements had been approved by Supreme Court Justice Reginald Ian Barrett and three senior judges in the Court of Appeal.
Weston's argument failed to appease creditors, who called for his immediate resignation.
Weston was appointed by the NSW Supreme Court because voluntary administrators, Steve Sherman and Peter Walker, were present at the May 2001 insolvency meeting and could have conflicts of interest.
Only the Court - and not creditors - could dismiss the SPL. Creditors at today's AGM nonetheless sought to establish a majority view with a motion that followed a unanimous vote of no confidence at a November 2009 meeting.
"I think it has cost the company a lot of money to have two liquidators. It is now appropriate for the SPL to now resign and hand the administration to Mr Sherman," Rich said.
"The SPL was appointed to investigate issues related to the share rights issue. I understand that a funder has recently been found, and Packer and Murdoch have been served.
"We request that forthwith, the SPL resigns. The SPL has finished the work it has been appointed to do, and the SPL should resign immediately."