SurfHad a very pleasant evening with the kids - they took us out...

Surf

Had a very pleasant evening with the kids - they took us out to tea - prolly knowing Ive lost so much on CMR I cant take them out lol but am now in my usual state for this time of night - DRUNK so off to bed now but briefly, in answer to your Q

This is all very uncharted territory for me and I dont know the ins and outs of it but as I understand it, the administrator's main duty is try to establish if the company can be made solvent - can it be a going concern. If it can, and it can pay its creditors out (those the company owes money to) he may allow that to happen and maintain ovrsight while that happens.

The dificulty is, while CMR no doubt have real creditors such as suppliers/workers/contractors etc as I understand it they are small fry to the key creditors.

It would seem CMR is in the unusual position where the key creditors are the Chairman - our joint venture partner and Cornell - the C note holder who loaned money to the company - presumably arranged by GT.

Of those three, my uneducated opinion would only see Cornell as a fair dinkum creditor because they are presumably unattached to the company. The other two are either the JV partners or the bloody chairman who's role it surely was to have structures inplace to ensure we never got to this point!

As i understand it, if the administrator cant see the company becomming a going concern, his first duty is to settle outstanding money owed to secured creditors - those who have something like a mortgage over assets of th company (like the bank has on your house). The next level (and am happy to be corrected) is unsecured creditors - workers fit in there somewhere but a I dont know where but from what I have been told - the last on the priority list are shareholders.

In the end, if he cant see the company being a going concern again, the administrator has the job of selling enough or all assets as needed to satisfy creditors - again, where workers fit in I dont know so will leave them out for convenience but they fit somewhere and probably above shareholders.

So he sells everything or as much as is needed to pay things out. First dibs go to secured creditors of which we are told there are none but if we had them - once they are paid the next in line are unsecured creditors and if they are paid out - whatever - if anything is left can go to shareholders. But it sounds like there wont be much if anything left by the time they get to us

It would seem at this stage the main creditors are Cornell, HNC and the Chairman and they are unsecured creditors and in normal circumstances shareholders would not get a seat at the table in any meeting of creditors because we are at the bottom of the list.

So in essence we have a situation where the leader of the company who was in the seat where the buck stops having first dibs at being paid out. He or anyone for that matter can approach the administrator and offer to buy the assets of the company - you could do it if you had the money from what I understand. If accepted, this would see the creditors paid to some degree - they might get all they are owed or they may just get a number of cents in the dollar - if they wont get all they are owed you can imagine they may well settle on just getting something - sort of like a stop loss in trading - The share price falls to a point where you want to get out and if you think it will get back to your entry price you might hang in for a bit - failing that you sell and take a loss but at least its not a total loss - you get something back

Imagine if the chairman is the only biddr for the assets - he make an offer to buy the assets and its enough to pay the unsecured creditors 10c in the dollar - while unhappy, they may see that as the best option available to them and say that will do - at least we get somethign back

He walks away with the assets and sharholdes are left with bits of paper saying they owned part of a company that now no longer exists.

We get nothing -

That is why my first aim is to show that the company misled shareholders - because in certain circumstances, if shareholders can show they were misled, a court might acknowldhe that and raise us or some of us up the ladder so we sit equally with other unsecured creditors. Then, I presume, anyone comming to the table saying I will give you 10c in the dollar needs to have shareholders accept that offer as well - not just cornell,hnc and toll

Hence the decision to offer myself as a conduit though which shareholders can cite instances where they felt they were misled so I can put that to a legal person to argue that we should have a seat at the creditors table

So again, if you feel the company misled you - please offer your examples of where YOU feel you were misled - it may be during post AGM discussions - may have been in a phone call - or ideally in an ASX release. Already I have different examples of why shareholders think they were misled but the more the merrier and greater our chances of sucess.

Once that is put to bed - we move our focuss to claims for negligence