pif related news, page-2

Hope for Octaviar morsel:::::Anthony Marx:::December 18, 2008 12:00am::::::::
CREDITORS chasing $1.8 billion voted yesterday for a deed of company arrangement over two entities in the failed Octaviar group and expect to recoup no more than 10 per cent of their money.

The deed will allow administrators to keep operating the companies mainly to distribute about $150 million cash and recoup money from the eventual sale of assets in the Stella Group of tourism holdings.

Another three companies in the group, formerly known as MFS, had control returned to the directors but the Brisbane Supreme Court is expected to wind them up at a hearing today.

Shareholders will get nothing back from the Gold Coast-based finance and tourism group that collapsed in September.

The Public Trustee of Queensland, which first sought to wind up Octaviar in June, was joined by another major institutional investor, Challenger, in unsuccessfully pushing for liquidation during a near four-hour meeting at the Brisbane office of administrators with accountancy Deloitte.

The two parties supported liquidation of the two entities because it would allow for the scrutiny of alleged insolvent trading and up to $117 million in alleged unfair preference payments.

The PTQ claimed Octaviar was actually insolvent on January 22, just after it went into a trading halt when shares fell in reaction to a restructuring plan. That is earlier than Deloitte's estimate that Octaviar might have become insolvent some time between February 4 and June 4.

Because the deed scheme is forward looking, it is likely that these issues of alleged corporate malfeasance will only be addressed if taken up by the Australian Securities & Investments Commission, which is believed to be examining the group.

Under the deed scheme approved yesterday, creditors of Octaviar Ltd will get back at most 4 in the dollar. The only secured creditor, Fortress Credit Corporation, has agreed to accept 65 in the dollar, or $25 million of the $38.5 million it is owed.

Administrator John Greig had recommended a wind up of Octaviar Administration Pty Ltd but creditors voted for a deed which will see them recoup at best just 10 in the dollar.

In a report released last week, Mr Greig flagged a possible breach of duties by the directors of Octaviar Financial Services when they declared a $100 million dividend in December last year. That issue was resolved yesterday when it became clear the dividend had actually been paid in September.