2012

STRATHFIELD GROUP: Administrator Seeks Advice on AU$5.5 Mln Loan
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The Australian reported that Strathfield Group Limited's
administrator plans to seek advice on a decision by the company's
former board to forgive AU$5.5 million owed to the company by its
founder, Andrew Kelly.

According to the report, administrator BRI Ferrier said it can
find no evidence that shareholders backed the board decision to
settle the debt with Mr. Kelly.

"We were unable, in our investigation, to obtain any documentation
relating to shareholder support for this proposal, or whether they
had any prior knowledge of it," the Australian cited the
administrator as saying in the second creditor's report.

The Australian recalls that in 2003, the company loaned AU$7.8
million to interests associated with Mr. Kelly so they could buy
certain company assets.

In November 2005, the report relates, shareholders approved an
agreement under which the loan was reduced to AU$5.5 million,
which Mr. Kelly agreed to repay in January last year.

The report says that a company associated with Mr. Kelly
transferred 25 million Strathfield shares to former Strathfield
chairman Richard Poole's private consulting firm Arthur Phillip as
security for the reduced loan.

According to the creditors' report cited by the Austrlaian, Mr.
Kelly threatened legal action in 2007 against Strathfield for,
among other things, the loss of value of his shares.

On November 15, 2007, the report states a settlement was discussed
by the board and agreement, ending all hostilities, was reached
with Mr. Kelly in July 2008.

As part of the settlement, the Australian says, Strathfield
accepted the 25 million shares held by Arthur Phillip as the final
payment for the debt.

Meanwhile, the report says BRI Ferrier will recommend creditors
accept a rescue bid from Tony Hakim's Clear Communications, which
last year emerged with a 70 per cent stake in Strathfield after
selling five businesses to the troubled company in an all-share,
AU$115 million deal.

BRI Ferrier said in the report that the deed of company
arrangement put forward by Clear -- which is working with
Strathfield's major secured creditor GE Commercial -- offered a
better outcome for creditors than liquidation of the 62-store
chain.

The administrator said, however, that it planned to seek advice
"as to whether there are any legal remedies available to either
Strathfield or a liquidator" in relation to the transaction with
Mr Kelly, who founded Strathfield in 1980, the Australian relates.

The Troubled Company Reporter-Asia Pacific reported on Jan. 28,
2009, that Strathfield Group has been placed in voluntary
administration.  The Group appointed Brian Silvia & Andrew Cummins
of BRI Ferrier as voluntary administrators to the company.

In a regulatory filing with the Australian Securities Exchange,
Strathfield said being mindful of the worsening economic
conditions, consumer demand and generally falling asset values,
the Board has carried out a recent review of the company's affairs
which has revealed a substantial impairments of goodwill,
receivables and inventory values that, subject to final directors'
and auditor review, will be recognized in its half year accounts,
which is likely to result in a negative net assets and
shareholders' funds position as at Dec. 31, 2008.

Subject to a report and recommendation from the administrators,
the company said it is hopeful to emerge from voluntary
administration under a Deed of Company Arrangement ("DOCA") which
may be put up by the company with the funding support of its
largest shareholder.

                     About Strathfield Group

Based in Sydney, Australia, Strathfield Group Limited (ASX:SRA) --