Collapsed broker may avoid liquidation April 23, 2008
THE administrators of Opes Prime say they are considering the possibility of keeping the collapsed stockbroker alive if it would benefit Opes creditors more than liquidation.
John Lindholm, of Ferrier Hodgson, said yesterday that a deed of company arrangement for Opes was an alternative to liquidation, if Opes's financiers agreed to it and if the administrators and Opes creditors believed it to be a better option.
Mr Lindholm said that a deed of company arrangement could sometimes provide a better outcome than liquidation.
"For that to happen, we would have to make commercial arrangements with several parties," he said.
Mr Lindholm said that a deed of company arrangement could avoid "years of litigation".
However, if some Opes creditors were to oppose a deed of company arrangement, Opes would have to be liquidated.
Aggrieved Opes Prime clients have taken court action in an effort to retrieve shares they had lodged with Opes in return for loans, before the stockbroker's collapse.
Receivers and administrators were appointed to Opes on March 27, after cash and stock movement irregularities were uncovered in a small number of accounts.
ANZ Banking Group, which is owed $650 million by Opes Prime and is the biggest secured creditor, began selling a pool of shares originally from Opes clients to recover its money. But some Opes clients are taking legal action against ANZ, saying the shares still belong to them.
The Federal Court in Melbourne yesterday granted the administrators an extension of the convening period for a second meeting of creditors of Opes and an associated company, Leveraged Capital, until June 23.
Counsel for the administrators, Robert Strong, told Justice Ray Finkelstein that the administrators wanted the extension so they could consider the outcome of Opes litigation currently before the court when advising Opes creditors at their next meeting.
Meanwhile, the struggling clothing wholesaler Austin Group says it will return to profitability in the second half of next financial year, after booking an interim loss this year.
Austin's troubles were exacerbated after it was caught up in the Opes Prime collapse, which left 45 per cent of its register in the hands of ANZ.
The Victorian-based wholesaler undertook a business review after reporting a first-half net loss of $3.5 million, driven by a $1.3 million inventory write-down and a 16 per cent decline in sales revenue.
As a result of the review, Austin aimed to improve sales through a "branded apparel strategy" while matching its cost base better with its business activity, said its managing director, Brendan Santamaria.
"The business is currently cash-flow positive, and we expect this situation to continue for the remainder of the current financial year and for 2008-09," Mr Santamaria said.
