Warranty claim proceedings - is this something that could come...

Warranty claim proceedings - is this something that could come out of left field and bite them , how much could they be up for if they get sued.



On 31 July 2014, the Group entered into and completed a sale agreement to dispose of Madman Entertainment. Consequently, Madman Entertainment ceased to be a subsidiary of the Group at 31 July 2014. At 31 July 2014, the Company recognised an asset of $3.8m relating to the working capital adjustment due from the purchaser on final settlement in respect to the Madman sale. During FY15, an independent review process was undertaken resulting in a determination that the amount receivable from Madman was $332,000. As at the end of the previous financial year, the Group had written down $3.5m against the receivable to reflect this determination. Whilst a provision has been made, the Group does not agree with the determination and is in the process of an appeal in respect of the determination to the extent of $2,527,000 inclusive of the carrying value in of $332,000. The Company has subsequently been advised that the purchaser intends to commence warranty claim proceedings. No formal action has been lodged at the time of this report.