Ddid the bank and the Board now that the empire was trading when...

Ddid the bank and the Board now that the empire was trading when insolvent? We'll find out as this gets dragged out.

"The founder and former chief executive of ABC Learning has been questioned over his dealings with Australia's major banks and the end of his marriage.

Eddie Groves told the court that an agreement was signed in 2007 with a syndicate of banks, and that agreement meant that the banks went from being unsecured creditors to having security over the money that they had lent to ABC Learning.

One of the key issues that the administrators are trying to uncover during this inquiry is whether or not the banks knew that the company was basically on a path to collapse, and if they changed their position from being an unsecured creditor to a secured creditor to enhance their position when the empire fell over.

Administrators are also trying to work out whether or not the directors of ABC Learning traded the company knowing that it was insolvent.

Mr Groves also responded to allegations by his former wife, Le Neve Groves.

In court yesterday, she said that she was denied access to financial information, but Eddie Groves denied that he withheld that information from her.

He also spoke of the nature of their relationship. He said the falling-out they had was not business related, in fact he said that for up to 12 years we worked well together, and only for two of those years did things turn sour.

He was also questioned by reporters as he arrived at the Federal Court about this issue.

"Mr Groves what do you expect in the hearing today?" asked one journalist.

"I'm just looking forward to being here," he replied.

"Mr Groves did you sack your wife from the board after she took out a domestic violence order against you?"

"No I didn't," he responded.


Meteoric rise and fall

Mr Groves was asked about the company's evolution, and spoke about how he built it from one childcare centre in 1988 to 12 centres in 1996.

He said that, thanks to changes in the law which allowed more lower socioeconomic people access to childcare, he was approached by an investment banker who said we can raise you $6 million, and you can turn this into a big empire.

By 2001, Eddie Groves told the court that the company had 43 centres.

He spoke about how he was the joint managing director of the business with his wife, and described about how rapidly the business grew after it listed in 2001 - opening in the United States, the United Kingdom and New Zealand.

He then went from being a managing director to a global chief executive, but when the global financial crisis hit in 2007, the world of childcare changed dramatically.

Mr Groves said wages skyrocketed because of changes to industrial relations laws.

He also said how he had to change ABC's business model because the market did not like companies with lazy balance sheets, in other words they wanted companies who had a strong cash position."

http://www.abc.net.au/news/stories/2010/04/14/2872544.htm?section=justin