Stirling Mortimer, the offshore property fund caught up in a dispute over €9.8m of cash which went missing from one of its cell funds, has agreed an out of court settlement to end an upcoming legal battle.
The board of the Stirling Mortimer Global Property Fund said in a statement released to the Channel Islands Stock Exchange it had agreed a deal with law firm ELS International Lawyers and Joe Ezaz, a former partner at the law firm.
The deal means a scheduled court hearing, listed to start today, will now be avoided.
The board of the fund said in a statement: "The precise terms of the settlement remain private and confidential to the parties under law. The settlement agreement was reached without any admission of liability or wrongdoing by any of the parties.
"What the Board can say is that it did not reach this agreement lightly, given its confidence of complete success if the claims proceeded to trial. In determining that the settlement was favourable, the Board took account of the likely size of the pool of assets available to be recovered from the defendants, the inevitable further reduction in that asset pool if the litigation continued, and the Board's own substantial additional costs of litigation if the claims proceeded to trial.
"Mindful of those factors, the Board is satisfied that what has been achieved in this settlement leaves the respective funds in a better financial position than they would have been in had the claims succeeded at trial."
The agreement comes after Ezaz, a former senior partner at ELS, was accused of misappropriating investors' cash in the Stirling Mortimer Global Property fund.
Ezaz was accused of misappropriating investors' money by moving it from the client account of the law firm and using it for purposes unrelated to one of the cell funds of the Global Property fund, called Cape Verde (No 4) Fund.
ELS had been in charge of holding €9.8m in an Escrow account and was supposed to return the cash as a rebate when the fund's property manager failed to hit certain sales targets in January 2010. But it failed to do so.
Stirling Mortimer won a High Court case against ELS in November 2010 which ordered the company to repay the full amount plus interest within 30 days.
However, only €3.5m was returned, forcing the redemption date on the fund to be pushed back.
Money also went missing from a number of other cell funds, and the board said it continues to work towards recovering that money.
It said: "Whilst the Board is pleased to have achieved this settlement, it of course does not result in the entire recovery of the missing monies being sought by Funds No 4 and No 5. Other options continue to be pursued to secure the recovery of the balance. We will continue to keep our investors appraised of matters as they progress."
Gérald Harlin has been appointed executive chairman
Daunting without ad valorem feees
'Will fulfil our responsibilities'
'Should be forever young'
New manager likely to be appointed