ocv may have been insolvent in 2006, page-2

The Australian
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Octaviar teeters on edge of collapse

by Fiona Cameron | September 11, 2008

OCTAVIAR was still teetering on the edge of collapse last night as a judge prepared to make orders for the failed funds manager to be liquidated or placed in administration.

Barristers representing creditors owed more than $1 billion spent a second day yesterday making submissions to the Queensland Supreme Court on how the assets of the former MFS should be managed and dispersed.

The Public Trustee of Queensland, represented by solicitor-general Walter Sofronoff, continued to argue for the more brutal liquidation, while other creditors urged that an administrator be appointed to seek a mediated outcome and give creditors some ongoing control.

The PTQ represents noteholders whom Octaviar is due to pay a total $348 million in 2011.

Octaviar presented new evidence to make the case for voluntary administration, arguing that this might offer creditors some potential upside and return more money than previously suggested.

Justice Philip McMurdo said he would make his decision tomorrow afternoon.

The provisions used to steer Octaviar's future could result in some of the company's previous deals being declared invalid, depending on what dates the court determines as key in the matter.

Octaviar's largest remaining asset is its 35 per cent stake in the Stella tourism conglomerate, and the value of that stake was the subject of various submissions yesterday.

Mr Sofronoff said it had an implied value of $215 million, "which in the scheme of this insolvency, is peanuts".

But counsel for Octaviar argued there was a prospect of "some uplift" in the Stella stake's value, depending when and how the asset was sold.

Mr Sofronoff urged the court to consider different classes of creditors and claims.

Justice McMurdo extended until tomorrow afternoon the injuction he issued on Tuesday preventing Octaviar voluntarily appointing an administrator.

Creditors including OPI Pacific Finance, the Australian Tax Office, Wellington Investment Management and Challenger Managed Investments all had their own barristers in court.

Octaviar was a high-flying corporate player when it hit the wall in January after failing in an attempted $550 million capital raising.

It has never resumed trading on the ASX.

Since January, chairman Andrew Peacock and most of the senior executives have resigned.

The wind-up hearing in Brisbane relates to Octaviar Ltd, Octaviar Investment Notes Ltd, Octaviar Investment Bonds Ltd and Octaviar Financial Services Ltd.