We can't blame CVC. They're just doing whatever they can to get...

We can't blame CVC. They're just doing whatever they can to get the best for their shareholders. And OCV under Deloitte's administration is a soft target.

Of course Stella has bombed. Haven't Deloitte heard of the GFC or seen the IMF's forecasts for global contraction. So what if Stella's revenue was only $17m despite a forecast of $210m. There are plenty of other companies with figures far worse than that. Companies that aren't in the highly consumer discretionary tourist industry. Apparently even the army of financial boffins didn't predict the massive drop in revenue that has hit the Rudd labour government. And now CVC are telling us that OCV should have known.

But what's in it for Deloitte for them to fight CVC's claim.

CVC exposed themselves to the risk when they bought Stella. They've got an opportunity to reduce the hit they've taken and Deloitte is rolling over to their demands.

The squeaky wheel gets the oil. Smart play by CVC. Their banker UBS will be happy.

The real question: is the original sale voidable because it was completed when the company was trading insolvent? That question has never been addressed. There'd be dinosaur sized egg on ASX face if the OCV/CVC 35%/65% deal is voided. After all, the ASX had to give Andy Peacock the nod to do his deal while trading was suspended. Correct?

IMLO (in my lay opinion) Deloittes were all over the shop with the issue of solvent trading in their Reports to Creditors of 10 December 2008. See my post http://hotcopper.com.au/post_single.asp?fid=1&tid=801977&msgid=4447947 Deloittes backed away from answering the solvency question saying "assessment of a company’s solvency is complex and comes down to a question of fact in the circumstances which requires detailed examination". It seems the $1.5M Deloitte's billed OCV's shareholders and creditors in those first few months wasn't enough to answer the question of solvent trading. Well how much is enough $$$? It's a rather important issue isn't it?

The question of solvent trading wasn't addressed by Justice McMurdo in his decision handed down on 6 March 2009 that has all the corporate finance lawyers in a flap and hopping for an appeal. But he certainly showed he has no fear of taking back ground squatted by corporate lawyers from powerless bureaucrats. McMurdo effectively applied a purposive construction which all those lawyers seem to wilfully ignore from their first week at Uni. Perhaps a court will readily void that highly questionable OCV/CVC 35%/65% deal if someone finally raises the question of solvent trading. But there's not much time left to do it. Even the PTQ, with their shots at WC, don't seem to want to. Meanwhile, the true value of Stella is still cloaked in secrecy. Once that GVH deal is over I'll be watching for a stunning turn around for Stella.