From PPX December update.
The Company has various financing arrangements in place on a regional basis and remains in compliance with all covenants. Compliance at 31 December 2011 and subsequently will depend on the size of the expected European impairment charge, future trading performance in each region and ongoing credit insurance.
Breaking of debt covenants puts you at the mercy of the banks. What happens to PPX if the banks play hardball? If that were to happen, it could bring things to a head quickly.
Breaking bank covenants on youtube
http://www.youtube.com/watch?v=Aok5lQeemDU
Trading while insolvent-directors become personally liable, so it is in their interest to not do so.
http://en.wikipedia.org/wiki/Trading_while_insolvent
http://www.laclawyers.com.au/document/Insolvent-Trading.aspx
Insolvent trading occurs when a company incurs a debt when it is unable to pay its debts as and when they fall due.
The law imposed on the directors, a duty to prevent the company from engaging in insolvent trading under Section 588G, at the same time implementing new statutory defences.
Director liabilities
http://www.aar.com.au/pubs/insol/insoljun03.htm
PXU only.
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