Further to my previous post, I now think the announcement is smoke and mirrors.
I don't know why the debt and the insolvency, were incurred by GoConnect Australia Pty Ltd - a 100% subsidiary of Goconnect Ltd - and not by the holding company GoConnect Ltd (which had its trading halt lifted today). That trading arrangement doesn't really matter, I suppose.
What does matter is GCN's statement in today's announcement that: "After due investigation GoConnect Ltd is satisfied that there is no material impact on the company."
That, I assume, is another way of saying that the parent company is not responsible for the debts of its totally owned subsidiary.
IMO you don't have to be a lawyer to say that the liquidator may not see things that way.
Consider the legal discussion at http://tinyurl.com/mr6p6kg and particularly the conclusion on page 271: "The more comprehensive the co-ordination, the more likely that the holding company will be liable for the debts of the subsidiary [my emphasis]."
Of course there is nothing wrong with a subsidiary incurring debts, unless they are insolvent. My point is that I find it difficult to believe that the directors of the holding company (GCN) did not know of the debts being incurred by its subsidiary. Indeed I would have thought that there was close to 100% coordination while this happened.
So I don't see that GCN is in any way out of the woods.
GCN Price at posting:
0.9¢ Sentiment: None Disclosure: Not Held
