Six-year receivership of Feltex coming to end as liquidator pursues suit
Nov. 21 (BusinessDesk) – The end is in sight for the six-year-long receivership of failed carpet maker Feltex Carpets, with remaining issues likely to be settled in the next two months.
Some A$116.95 million has been repaid to Australia & New Zealand Banking Group as at Sept. 30, leaving a balance of A$2.55 million owed plus accrued interest, according to the latest receivers’ report. Including interest and costs, the lender is expected to be owed more than A$16 million, according to a separate liquidators’ report in June.
Feltex was put into receivership in September 2006 with unsustainable debt levels and following a share price collapse. All of its assets were sold to Australian rival Godfrey Hirst two months later.
In a report released to the Companies Office yesterday, Kerryn Downey of McGrath Nicol said the last remaining Godfrey Hirst retention issue is likely to be determined in the next two months. Once finalised “we will be in a position to make a final repayment of the surplus funds to the general security agreement holder and retire as receivers and managers,” Downey said.
No funds are likely to be available to the liquidators to meet claims of unsecured creditors. EXFTX Ltd, as Feltex was renamed, had a cash balance to $430,433 as at Sept. 21.
The sorry tale of Feltex isn’t about to end, however. Liquidators Iain McLennan and Peri Finnigan of McDonald Vague are pursuing a claim against accounting firm Ernst & Young, which audited Feltex’s accounts. Those recovery proceedings may take time, they said.
“We have agreed a timetable and are working through discovery issues, and have paid security for costs,” they said in June. At that time there were 614 unsecured creditors owed about $13.9 million.
Separately, 166 shareholders have lodged claims as unsecured creditors for about $6.3 million, related to shares purchased in Feltex’s initial public offering.
In September, the Court of Appeal reserved its decision in the fight to free up director indemnity insurance to cover the cost of defending claims in the Feltex class action.
Feltex's directors at the time of the IPO were Tim Saunders, Sam Magill, John Feeney, Craig Horrocks, Peter Hunter, Peter David and Joan Withers. They all subsequently resigned. The other parties to the class suit include broking firms Credit Suisse, First NZ Capital, and Forsyth Barr, who sold and promoted the offer.