Wednesday, 28 September 2011

PPB gets the Hammerschlag hint

SUPREME Court justice David Hammerschlag could not have been any gentler or more persuasive in his insistence that PPB, the liquidator of the former ABC Learning Centres (Now ZYX Learning Centres in Liquidation) get a wriggle on in its defense of a $70 million claim being mounted by a Morgan Stanley private equity-type entity, domeciled in the Cayman Islands.
The claim centres around a series of meetings attended by at least eight former ABC Learning staff.

Lawyers for Morgan Stanley told the court their client is keen to subpeona "third paries" as part of its discovery process in preparation for a hearing in 2012 and named Pitcher Partners as "the former accountant or auditors" in this context.

To be fair, there is no bulls eye on Pitcher Partners. After the ABC Learning Centres board replaced Pitchers with Ernst & Young and then got the shock of its life it brought in a KPMG audit team to review the accounting treatments applied by both Pitchers and E&Y.

According to ABC founder Eddie Groves, KPMG couldn't find fault with either auditor's treatment.

Justice Hammerschlag took several opportunities to remind PPB's solicitor about the need for PPB to have advanced the process by the time they return for directions on December 9, 2011.

"I'm sure Mr Foreman's clients will respond with reasonable alacrity to the requests," Justice Hammerschlag said. Then a little later: "You expect a liquidator to act with all due dispatch," he opined before adding that a liquidator has many issues to consider.

Given ZYX is now in the hands of an insurer it will be interesting to see if alacrity and all due dispatch will get both sides to a hearing by May or June, 2012.

Even the judge agreed it was an ambitious target, particularly given there was a Christmas/New Year break approaching which would delay some of the important work.

"I was a solicitor for many years and I hated working over that period and I don't expect other people to," he said.

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