administrator says abc learning owes $1.6bn

November 18, 2008
Article from: Australian Associated Press

THE administrator for ABC Learning Centres says the company has more than than $1.6 billion in liabilities in Australia alone.

More than 100 ABC Learning creditors gathered in Brisbane today for a meeting with insolvency firm Ferrier Hodgson for an update on the child care giant's situation.

Greg Moloney, from Ferrier Hodgson, said ABC owed more than $900 million to secured creditors, including banks.

Mr Moloney said $31 million was owed to staff, but that figure could be substantially higher if redundancies were necessary.

The meeting was told there were two possible legal actions against the company - one by global financial services firm Morgan Stanley over misleading and deceptive conduct and another by Australian shareholders.

The receiver, Chris Honey of McGrathNicol, told the meeting that work was well under way on a business plan to ensure ABC centres remained opened in 2009.

Despite reports that 40 per cent of centres were unviable, they could continue to operate, Mr Honey said.

"Previously, the company's focus has been on growth,'' he said.

"Our focus is 100 per cent on the operation of the company's existing facilities.''

A creditors' committee will be established at the meeting, while nominations from other firms to act as voluntary administrators will be considered.

ABC Learning operates 1200 childcare centres in Australia and New Zealand caring for about 120,000 children.

The company was placed into voluntary administration earlier this month with debts of more than $1 billion.

The Federal Government has provided $22 million to keep the centres open until Christmas. The meeting is continuing.