Shopping centre owner Centro’s eight current and former directors breached their duties when they signed off on financial statements in 2007 that falsely indicated the group’s short-term debt position, Australian federal court ruled.

In a 189-page ruling issued in Melbourne, federal court judge John Middleton said that Centro’s 2007 annual report failed to reveal A$1.5 billion of the group’s short-term liabilities by classifying them as non-current liabilities and failing to reveal $1.75 billion of guarantees of short-term debt of an allied firm.

Centro was burdened with a debt of billions of dollars that it needed to repay within a year. $1.1 billion was to be repaid to J. P. Morgan.

The wrong statement affected the group’s balance sheet, and shares in Centro slipped from A$5.70 to A40c after investors came to know the reality.

In his written judgment, Justice Middleton said, “However, I have found ... that the directors failed to take all reasonable steps required of them, and acted in the performance of their duties as directors without exercising the degree of care and diligence the law requires of them."

The corporate regulator could ask the court to ban the directors from managing or serving as directors.

In a statement to the Australian Stock Exchange, Centro said that it was reviewing the ruling and would comment further later this week.