Centro's 2006-2007 accounts contained a multi-billion dollar debt error.

Failed property group Centro looks to settle with litigants. Photo: Rob Homer

The long-running class action against the directors of failed property group Centro is to settle for $200 million, sources say.

Hearings before Federal Court judge Michelle Gordon started at the beginning of March and were set to run through to the end of June.

Shares of litigation funder IMF, which is backing a claim run by law firm Maurice Blackburn, entered a trading halt this morning, to continue until the earlier of ‘‘an announcement concerning the Centro matter’’ or the start of trade on Thursday morning.

A second claim, run by rival law firm Slater & Gordon, is being heard at the same time.

It is believed a global settlement has been reached that takes in Centro, its directors and auditor PricewaterhouseCoopers, which was added as a cross-respondent by Centro.

Sources said discussions about details of the deal were continuing, but PwC may pay as much as a third of the settlement.

While the settlement figure is at the lower end of the amount claimed by the shareholders, it is believed to represent the largest settlement ever reached in an Australian shareholder class action.

Centro Retail Australia has also requested a trading halt for its shares.

Centro group was one of the first major companies to collapse after financial markets peaked in late 2007. Bankers, lawyers and investors have fought for years to apportion blame for Centro's demise.

Shares of what was once the world's second-biggest shopping centre owner behind Westfield fell more than 90 per cent in a single day after Centro's then founder Andrew Scott revealed a failure to disclose the full extent of its debt.

'Groundbreaking'

Professor Ian Ramsay at the Melbourne Law School confirmed the settlement would be the largest in Australian legal history and would set a precedent for shareholder class actions.

"It really is a major settlement - a groundbreaking settlement - in terms of dollar value," Professor Ramsay said.

"Of course it is critical to know who contributes what. And of course the other issue is the very high legal costs that have occured to take us through to today."

Professor Ramsay said the previous benchmark was set by Aristocrat in 2008 with its settlement of $144 million.

Other recent big settlements include the 2003 GIO deal for $112 million, and Multiplex's 2010 settlement of $110 million.

with Georgia Wilkins

bbutler@theage.com.au