15 Apr 2010

ABC Learning founder questioned over dealings with bankers

1:16 pm on 15 April 2010

The founder and former chief executive of the failed Australian childcare company, ABC Learning, has been questioned over his dealings with his bankers.

The company went into voluntary receivership in late 2008 owing $A1.6 billion.

Eddy Groves has told an Australian court that an agreement was signed in 2007 with a syndicate of banks, which meant the banks went from being unsecured creditors, to having security over the money that they had lent to the company.

Administrators of ABC are trying to establish whether the company's directors knew it was insolvent, and whether the banks knew it was on a path to collapse, thereby changing their creditor position to cover any losses if the business fell over.

ABC's 127 childcare centres in New Zealand and the College of Early Childhood Education were never in receivership, but the Australian recievers have been trying to sell the New Zealand subsidiary since the Australian parent collapsed.