news of 15 mil payment to hybrid holders.

Does anybody know anything about a payment.

See Below.
No joy for Allco employees




Three months after Allco Finance Group went into receivership, former employees have not been paid their entitlements and Allco's leading bankers, Westpac and Commonwealth Bank, show no signs of paying up.

Nor is there any likelihood that Allco's receiver, Steve Sherman from Ferrier Hodgson, will give the employees priority ahead of secured creditors.

Assets were available to pay the Allco employee entitlements but the banks sold them and took the entire proceeds.

The problems facing Allco employees were first highlighted by Business Spectator in an interview with former Allco chief executive David Clarke (Allco's lessons learned, January 5, 2009).

The Allco collapse has highlighted the weakness in the law passed nine years ago to protect the entitlements of employees caught up in insolvency.

It also carries a warning for other people working in the financial services industry because most financial institutions pay their employees through special employment companies with no assets.

The Allco employees worked for a services company called AFG Pty Ltd, which had no assets. It did not even have a bank account.

This meant that when Allco Finance Group went into receivership the employees could not hope to enforce their rights under the Corporations Law.

Under the Corporations Law employees, as unsecured creditors, are entitled to seek payment from the sale of any asset of the company that is secured by a floating charge. As unsecured creditors they are not entitled to seek payment from the sale of any secured asset.

Allco employees were told they had first ranking security over Allco's leasing business, which was sold for about $120 million, according to an Allco employee representative, Chris Bowen.

Bowen says there was a floating charge over the leasing division but when the business was sold the banks took about $105 million and about $15 million was handed to the holders of hybrid securities.

She has written to Westpac and CBA, the two leading banks in the 11 member Allco syndicate, but has not had any indication they will cover employee entitlements.

Both Westpac and CBA have written down their exposures to Allco.

Bowen's campaign to get Allco employee entitlements paid has included fronting the receiver, Steve Sherman, at a public event in Sydney last week.