Timbercorp Finance liquidator Korda Mentha has failed in a bid for a court ruling that investors who borrowed from the group to invest in its agribusiness schemes cannot defend proceedings for recovery of the money.As a result, the liquidator faces the prospect of working through more than 1000 defended claims before recovering any money.Between 1992 and 2009 Timbercorp Group invested more than A$2 billion in agribusiness projects on behalf of 18,500 investors. Many investors borrowed money from Timbercorp Finance, a member of the group, to finance their investments.Timbercorp went into administration in April 2009 and into liquidation a couple of months later.At the time, Timbercorp Finance had 14,500 outstanding loans to 7500 borrowers worth $477.8 million on its books. In the months following the company's collapse, borrowers with a total of 8470 loans stopped making repayments and went into default.Timbercorp Finance (in the hands of the liquidators) started proceedings against a number of the borrowers but that was overtaken by the launch of a class action against Timbercorp late in 2009.Timbercorp investors alleged that there were deficiencies in the disclosure documents.Part of the relief sought by the class was an order that those participating in the proceedings be found not liable for repayment of loans advanced by Timbercorp.The class action was dismissed in the Victorian Supreme Court in 2011 and again on appeal a couple of years later.Following those decisions Timbercorp Finance re-commenced proceedings against borrowers to recover the unpaid debts.In a Victorian Supreme Court case against investors Douglas Collins, Janet Collins and John Tomes, Timbercorp argued the investors (who had been involved in the class action) could not put defences against the recovery proceedings because they were group members and subject to a legal principle called estoppel.If Timbercorp had been successful in these proceedings it would have been able to go after all of the borrowers without having to go to court in each case.However, the court ruled that the borrowers were not precluded from defending Timbercorp's claims.Timbercorp Finance appealed the decision and earlier this month the Victorian Court of Appeal handed down a judgment upholding the Supreme Court decision.The appeal court said it was not unreasonable for group members not to have raised their individual defences in the course of the class action and they should not be "estopped" from relying on their individual defences in the loan recovery proceedings.It said the defences pleaded by Collins, Collins and Tomes were personal to them and different from the allegations in the group proceedings.It also said that Timbercorp would have had to respond to the individual claims either as part of the group proceedings or in separate proceedings, so there was little if any prejudice caused.Gadens partners Ivan Hristovski and Glenn Bushett said in a note to clients: "The liquidator of Timbercorp must now face the prospect of over 1000 defended debt claims. The case is a timely reminder of just how inconclusive group proceedings can be."A Victorian Supreme Court ruling handed down last week in a separate case, Timbercorp