Austock Group has come under further scrutiny over its involvement with ABC Learning Centres (ABC), with the failed childcare provider’s liquidator saying select payments made by Austock to its subsidiaries are recoverable.
In a statement to the Australian Securities Exchange, the financial services firm said it had received letters of demand from lawyers acting for ZYX Learning Centres (formerly ABC Learning Centres) claiming payments Austock made during the six months prior to ABC going into voluntary administration were recoverable as preference payments under sections of the Corporations Act 2001.
Two payments were under question, the first being $1 million in corporate advice fees paid by ABC to Austock Corporate Finance Pty Ltd on 14 October 2008 in relation to the sale of the ABC US business to Morgan Stanley Private Equity completed in June 2008, Austock said.
The second payment is $1.7 million in fees paid by ABC to Austock Property Services Pty Ltd on 4 November 2008 for ongoing property services.
“Austock does not dispute that the payments were received, however, Austock is seeking legal advice before responding to the claims,” the company said.
In October, the former chief executive of the failed childcare centres, Edmund Groves, filed a $7.4 million legal action against Austock.
In early September, Groves sent a letter of demand to Austock alleging that on 27 February 2008 he gave an order to Austock to sell around 5 million company shares at market price.
Groves alleged Austock did not execute the order, leaving him to suffer losses of about $10 million.
According to the company’s full-year results, Austock, through its Austock Childcare Fund, leased a total of 519 childcare properties to ABC.
In November 2008, ABC was placed in receivership, effectively freezing the rights of the fund and threatening the fund’s income and capital structure profile.
