Trouble is, these words from Skippen (Aug15 - The Director...

Trouble is, these words from Skippen (Aug15 - The Director interview) will almost certainly now come back and haunt him and SGH:
-----
CD: The PSD acquisition was a transformational deal. How did the board assess that deal and how it would monitor the implementation of the acquisition?

JS: Slater & Gordon first went to the UK in 2012, so we already had a good understanding of that market. PSD was a complex deal, simply due to its size and the nature of its cases. We strongly believe the best people to assess the value of work in progress are the people who do the work each day, so we had more than 70 of our solicitors go through PSD’s files as part of the due-diligence process. We also had Ernst & Young, Greenhill & Co [an independent global investment bank] and CitiGroup advising us.

Andrew Grech, Ken Fowlie and Kirsten Morrison [Slater & Gordon’s group general counsel] were in the UK for several months doing due diligence, in addition to the firm’s M&A team. We had at least five board meetings about the PSD deal and I spoke to Andrew every day or two for an update on its progress. It was the most rigorous due diligence I have seen.

CD: How does the board test and challenge management when approving large deals?

JS: A key difference between the PSD deal and our other acquisitions, apart from its size, was the valuation. Management was prepared to pay a higher multiple for PSD because it meant we were doing the equivalent of 20 to 30 transactions in the UK in one deal. The board had to be convinced about the valuation and after careful consideration it approved the deal.

Another board consideration was integration. Slater & Gordon decided to keep PSD as a separate operational unit, and Ken Fowlie relocated to the UK. The CEO of our UK operations, Cath Evans, and Neil Kinsella, the firm’s head of general law UK, were already there and doing a great job. The board was satisfied that several of the firm’s top people were on the ground in the UK, leading the implementation.
-----
http://www.companydirectors.com.au/...ions/august/profile-q-and-a-with-john-skippen

Then there is the small matter of the $890M that they raised from shareholders as well as the $400M+ in extra borrowings that they then persuaded the banks to give them.

So, what goes round, will also come around.

It does though also present as a complication for the revised date of 26/5 in which to file their defence to the MB CA claim. At the same time as doing this, they will have to also issue their crossclaims (if any) against one or more of (*) Citigroup, (*) Greenhill & Co, (*) Macfarlanes, and (*) Arnold Bloch Leibler, all of whom were extensively involved in and throughout the DD process.

If anything, what this is positioning for is for SGH to also say and blame their DD advisers for what occurred (ie: they should have known, after all they were the experts in the DD trade).

So, the defence ("It wasn't us - it was THEM --->") will prove somewhat interesting when it is filed.

So too, will the crossclaims ("We trusted them. We were the idiots. We didn't know what we were getting ourselves into to. Ignore all that crowing and those comments about all that DD effort. It was really them who did it all and are responsible. We just took the credit for it.").

But rather than sorted, this is now going to get very messy indeed, all round the place, including almost total management distraction from the business. Win and SGH punts on (even if in a radically different shape). Lose, however, and SGH is finished.

These are the types of "end of corporate life" actions that are occasionally taken. They represent a last grasp at survival and the only grasp that is left. In other words, this is an all or nothing action. The question then is whether it will be for all, or whether it will end up as nothing. And with that inherent uncertainty in play, so too goes any sense of business certainty or normality for quite some time ahead.