I have not received formal notification of the 26 May meeting.
Has anyone else here?
Perhaps (as in the BNBG situation) the Noteholders are represented by the Trustee and can only be observers at a creditors meeting?
Allco moves towards wind up
Staff reporter
Administrators of collapsed financier Allco Finance Group have recommended creditors vote in favour of winding up the company and pursuing investigations into insolvent trading and voidable transactions by directors.
McGrathNicol said in a supplementary report to creditors that there was “substantial value” in taking legal action against the former directors of Allco Finance Group.
In the report, McGrathNicol partners Tony McGrath and Joseph Hayes said creditors should reject a deed of company arrangement (DOCA) from Jim Byrnes that would have delivered Mr Byrnes a fee of $250,000.
Mr Byrnes is a colourful identity in the Sydney business community. He is best known for being an adviser to entrepreneur Alan Bond in the 1980s. In 2007 he was jailed for four months for smashing a window with a baseball bat in the office of a Sydney solicitor.
McGrathNicol said creditors should vote against the DOCA because it did not compensate creditors for the significant loss of value that a liquidator may be able to recover for the benefit of creditors.
Mr Byrnes said Australian Litigation Funders Pty Ltd had agreed to fund further investigations and the litigation claims arising from these investigations.
The terms of the funding agreement included a success fee of 35 per cent of the recoveries, recovery of legal fees and investigation expenses. Each recovery action would be considered separately therefore costs incurred in an unsuccessful action would not be recouped from a successful recovery.
Mr Byrnes has signed up Andrew Wily of Armstrong Wily to administer his DOCA and Mr Wily agreed to cap his fee at five per cent of realisations.
The administrators said Mr Byrnes' DOCA did not cover all the companies in the Allco group and this condition would hinder the recovery of funds because of the complex inter-twined nature of the group.
McGrathNicol also questioned whether Australian Litigation Funders, which was associated with Mr Byrnes, had the financial capacity to fund the investigations and litigation.
The administrators said the Allco banking syndicate did not support the DOCA proposal.
Also, the administrators disputed a claim made by Mr Byrnes that the same claims are available under a DOCA as are available to a liquidator.
“This is incorrect,” the creditors' report said.
It said that the following recovery actions were only capable of being commenced by a liquidator: insolvent trading, unfair preference actions, director-related transactions and actions to set aside the banking syndicate's security.
McGrathNicol said it had been approached by “an external party” offering to finance investigations into activities of the former directors of Allco.
“As yet, the Administrators have not yet entered any funding arrangements and will seek feedback from Creditors prior to doing so,” he said.
Allco Finance Group was placed in voluntary administration on November 4 2008. It lost $1.74 billion in the year to June 2008. At the time of its administration it owed its bankers $640 million and other creditors were owed another $505 million.
Former employees of the company are still waiting on a court ruling as to whether they are entitled to be paid their claims from the sale of assets.
Creditors will meet in Sydney on May 26 to vote on the DOCA and the recommendation to wind the company up.
AFG Price at posting:
14.0¢ Sentiment: Hold Disclosure: Held
(20min delay)