http://www.goldcoast.com.au/article/2009/10/12/146735_gold-coast-...

http://www.goldcoast.com.au/article/2009/10/12/146735_gold-coast-business.html

King: I'm not bankrupt
Nick Nichols, business editor | October 12th, 2009

"MFS founder Michael King has vowed to 'vigorously' defend a $650 million class action brought against him and his former company's auditors by Premium Income Fund investors.

The Gold Coast businessman, through his lawyer, also emphatically denied yesterday that he had been declared bankrupt.

The Gold Coast Bulletin yesterday reported Arthur Carney, of Sydney firm Carneys Lawyers, was not expecting a defence from Mr King against the class action as Mr King had been declared bankrupt.

"They (Carneys) have alleged to your reporter our client is bankrupt (when he is not)," wrote Mr King's lawyer, Mark Lacy, in a letter to The Bulletin yesterday.

Mr Lacy's statement was backed by Nick Mellos, trustee for a July agreement reached by Mr King with margin lenders to which Mr King and MFS co-founder Phil Adams owed about $127 million.

Mr King has agreed to repay an undisclosed part of the debt, thwarting bankruptcy proceedings.

"He is definitely not bankrupt," said Mr Mellos, a partner with Grant Thornton. He said the agreement was 'on track' and Mr King had 'some work to do' in order to make good on his commitments to creditors.

Meanwhile, in a broad response to yesterday's Bulletin report, Mr Lacy, of Hickey Lawyers, said allegations that Mr King was not planning to respond to the class action were incorrect.

"(Mr King) has never conveyed such fact to them (Carneys Lawyers) and, to the contrary, has conveyed any such action will be defended vigorously," wrote Mr Lacy.

"In circumstances where such basic facts are misstated, one must question the assertions made in connection with the class action itself.


"(Mr King) continues to deeply regret the financial loss many have suffered through the collapse of MFS ... and sincerely apologises for his inability to undo the events of early January 2008 once he had to resign as a director and CEO of MFS.

"In due course, he expects that the true causes of the failure of MFS will emerge, and the true people and organisations behind such failure will be identified, as will the wrongful conduct of those organisations and people."

Mr Lacy said Mr King welcomed the appointment of liquidators to MFS, which is now known as Octaviar.

"He has already indicated to such liquidators his full co-operation with such process and he looks forward to such investigation," wrote Mr Lacy.

"He personally intends to spend significant time in the next few years pursuing a range of people and organisations for their wrongful conduct in the demise of MFS and the losses caused to so many.

"Our client invites further investigations into the affairs of MFS as he believes, in due course, such investigations will show the true cause of (and people and organisations behind) the demise of MFS."

Mr Lacy said 'each and every independent investigation conducted to date has not identified one thing alleged to be wrongfully done by our client'.

"Our client expects in due course further investigations will continue to clear him of any wrongdoing concerning MFS."

Mr King also was prepared to spend the next few years defending the 'unblemished reputation and integrity' of former MFS staff who had been subjected to 'wrongful reporting concerning events at MFS prior to January 2008'.

These reports had left him 'deeply saddened' for staff he described as 'talented, loyal and dedicated'."