Wasn't New Tel (Nasdaq NWLL) in Dirks and Heysek's 100 wk 100 dollar club!
New Tel bosses to face lawsuit
Herald Sun
14jul03
THE liquidator to the collapsed telecommunications group New Tel will launch legal action against Peter Malone and fellow directors of the failed telco within a month, alleging they allowed the company to trade while insolvent for at least six months.
A PricewaterhouseCoopers partner, Phil Carter, is seeking to claw back $40 million to $50 million owed to New Tel creditors and, depending on his success, said anything from 0c to 60c in the dollar would be returned."This is an Australian public company that lost a lot of money, and from where I'm sitting I'm expecting to sue every one of the directors," Mr Carter said.
PWC's case for insolvent trading, if proved, will mean Mr Malone and his boardroom colleagues can expect the Australian Securities and Investments Commission – which continues to investigate the collapse of New Tel – at the very least to launch action seeking to ban them acting as company directors.
New Tel collapsed in December last year when one of the company's biggest creditors, Optus, appointed PWC as administrators.
The company had raised more than $100 million during the telco boom and question marks remain over where all the money went.
"I'm confident that New Tel was insolvent in the last six months," Mr Carter said, adding there was "evidence to suggest it was even earlier than that".
Directors during this time were Mr Malone, chairman Harry Sorensen, US-based Mark Hake, and Hong Kong-based Gary Koh and An Zhou.
High-profile director Domenic Martino quit the New Tel board in February 2002 and is not expected to be targeted by PWC. But he was forced to resign as chief executive of accounting group Deloitte Touche Tohmatsu following the controversy over New Tel.
As reported last year, unaudited cash-flow statements obtained by The Australian indicated the company was insolvent by at least August last year.
From May 2002, New Tel had started slashing payments to suppliers, including Telstra, Optus and AAPT. In May it paid $17.2 million to suppliers but slashed this to $581,457 in June.
At the end of August it had just $408,582 in cash but only after stalling payments, indicating the company was already insolvent.
Mr Carter is also seeking to unwind payments made to third parties during this period, particularly focusing on a $5 million deposit to Sydney-based telco company Digiplus.
It is understood arbitration between PWC and Digiplus over the payment – part of a failed merger bid launched by Mr Malone as he looked for ways to save the company – is due to start in the next few weeks.
New Tel directors are also believed to have a $10 million insurance policy to cover them for insolvency actions.
Mr Carter would not comment on the policy or which insurance company it was with.
He also defended PWC against criticism that it had taken too long to settle New Tel's affairs, saying by comparable liquidations PWC was well advanced.
Critics have accused PWC of raking fees which sources indicated are now up to about $3 million. |
