Did they comment on the potential governance issue given the...

Did they comment on the potential governance issue given the related party nature of the contract or were they satisfied it was arms-length? I would contend that governance concerns are weighing on the minds of investors far more than the quantum of a one-off bad debt, especially if there are reasonable prospects to recover.

A 0 recovery assumption is interesting. You'd either be assuming that SMS is insolvent, which seems unlikely based on their most recent ASIC filings and the buoyant industry conditions, or that they have a legitimate basis to dispute the full quantum of the amount owed. The later would raise some serious questions for MSV. I'd venture the analyst just didn't feel he could handicap the likelihood or amount of recovery, so went with the easy/conservative option of assuming 0 recovery, even if it is not the most rational one.