It is reasonable to infer that, had the circumstances identified in the previous subparagraphs of this paragraph occurred, ASIC would have taken immediate steps to suspend or cancel Banksia's AFSL under s.915B(3) of the Corporations Act, further or alternatively Trust Co or ASIC would have applied to the Court under s.283HB(1) of the Corporations Act.
If one or more of the events described in sub-paragraphs (a) to (e) inclusive above had occurred, then within a few weeks thereafter:
(f) Banksia would have ceased to accept further deposits or to issue or roll over debentures and its business would have ceased;
(g) steps would have been taken by one or more of the defendants, Banksia debentureholders or ASIC (for example, by application to the Court under s.283HB(1) of the Corporations Act) to prevent any further harm coming to Banksia and the Banksia debentureholders from the matters alleged in the following paragraphs of this statement of claim:
(i) paragraphs 17(c) and (d) (namely the progressive rollover into Banksia debentures and the payment out of Statewide debentureholders at 100 cents in the dollar, when in fact Statewide was insolvent at the time of the Statewide Acquisition, and accordingly Statewide debentures were worth much less than 100 cents in the dollar. The total amount of Statewide debenture rollovers exceeded $238M and the total amount of Statewide debenture payments out by Banksia exceeded $100M (see V4.388). Each such rollover and payment of 100 cents in each dollar of Statewide debentures by Banksia constituted a transfer to the Statewide debentureholders of Banksia's assets which ought to have been available - and would otherwise have been available - to pay Banksia debentureholders in full);
(ii) paragraphs 18, 19 and 20 (namely the progressive transfer of impaired Statewide loans to Banksia at inflated book values and in breach of the 70% LVR in the Banksia Trust Deed, which had the effect of progressively devaluing the Banksia loan book during the time that the transfers took place (2009-2011) and thereafter because the value of the loans in the Statewide loan book continued progressively to deteriorate following the Statewide Acquisition in March 2009, as disclosed by the documents which appear at V1.064, V1.065, V1.066, V1.067, V1.364, V1.393, V1.415, V1.445, V2.001, V2.032, V2.053, V2.139, V2.203, and V11.016-V11.048);
(iii) paragraphs 22 and 23 (the purported underwriting of BMF loans using Banksia debentureholders' funds, which constituted a preference given by Banksia to unitholders in BMF at the expense of Banksia's debentureholders and a misuse of Banksia's property which ought to have been preserved in order to pay Banksia's debentureholders in full);
(h) if the steps described in sub-paragraph (g) above had been taken, because the matters alleged in paragraphs 17-23 above were both unlawful (because they involved the mixing of Statewide's debenture trust assets and liabilities with Banksia's debenture trust assets and liabilities in breach of trust, as alleged in paragraphs 74E-74H below) and harmful to Banksia and its debentureholders, they would have been stopped immediately or very shortly after they were publicly disclosed, for example by the appointment of external administrators to Banksia, or by other judicial proceedings commenced by ASIC, Trust Co or the Banksia debentureholders, for example under s.283HB(1) of the Corporations Act;
(i) had one or more of the events described in sub-paragraphs (f)-(h) above occurred in 2009, it is likely that Bolitho and the Banksia Group Members would have suffered no loss at all because Banksia was solvent in 2009 prior to and for some time following the Statewide Acquisition;