awyers seem set to determine Pharmanet Group's destiny in the next two weeks following Statutory Demand maneuvers by interests associated with Anthony Palermo.
Anthony Palermo controls Monarch Corp Pty Ltd and Primelane Pty Ltd.
Monarch is seeking recovery of $858,000 from PNO and Primelane is seeking recovery of $422,500.
The total comes to $1.28m.
According to PNO's half yearly accounts, the company had cash of $30,000 at December 31.
Subsequently, John Palermo, PNO chairman and chief shareholder, is said to have injected some $300,000 in convertible note money.
On this basis, it would seem that Anthony Palermo's demands will find PNO about $1m short - unless the company can sell assets, sell bulk Thermalife gel and/or raise more money from backers such as John Palermo and Celtic Capital.
In a legal context, the issuance of a Statutory Demand is often the first step in a process to send a debtor company into liquidation.
John Palermo will need to respond to Anthony Palermo's action within 21 days of the receipt of the Demands.
We don't have an exact date but we conclude that the 21 day clock started on/about March 21, the day PNO called a trading halt.
The next salient date is March 25, the day PNO issued a statement to the ASX headed RECEIPT OF STATUTORY DEMANDS ON DISPUTED DEBT.
The use of the term "Disputed Debt" for the first time is telling.
It suggests that PNO will seek to neutralize Anthony Palermo's strategy by signaling to the Court that the debt is "in dispute" and hence the Statutory Demands should be set aside.
The Court would then consider argument in order to satisfy itself as to the veracity of the "dispute".
As Courts frown on claims of "dispute" that turn out to be trivial, PNO will need to take great care to substantiate its claim.
If it can convince the Court to set the Statutory Demands aside, it will have achieved a notable legal victory.
If its setting aside application fails, PNO will have an additional seven days to pay the debts under s459F(2) of the Corporations Act 2001, unless the Court extends the time for compliance with the Demand.
Legal sources say that if the company intends to appeal the Court's decision, it would be prudent to apply for additional time for compliance before the time for compliance has expired.
Once the time for compliance has expired, the Anthony Palermo camp would be entitled to petition for PNO to be wound up.
Given the clock's now been ticking for 10 days, it would seem that PNO's destiny will be clarified around Friday, April 11.
CAI Price at posting:
0.1¢ Sentiment: None Disclosure: Held
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