Regulator eyes failed ABC

A spokeswoman for the Australian Securities and Investments Commission said it had been in contact with the receivers and administrators since ABC's collapse.

ABC was yesterday placed in voluntary administration, but the receivers insisted all centres would remain open.

A corporate recovery specialist will run the company, with assistance from secured creditors and the Federal Government.

ABC operates about 1100 centres in Australia, and caters for more than 100,000 children. It accounts for almost a third of the child-care market.

But a lack of cheap debt has forced it to sell overseas businesses. ABC has not released its 2007-08 accounts and remains suspended from trade.

Shares that climbed as high as $8.80 were last traded at 54.

Yesterday, three ABC directors appointed Peter Walker and Greg Moloney, of Ferrier Hodgson, as voluntary administrators for ABC and 38 related entities.

And a group of eight banks, owed up to $1.4 billion, appointed McGrathNicol partners Chris Honey, Murray Smith and John Cronin as receivers and managers.

Commonwealth Bank is believed to have exposure of about $650 million. Westpac, ANZ and NAB yesterday confirmed exposures of $200 million, $182 million and $140 million respectively.

But Mr Honey said the administrators would provide details of outstanding debts, while he and his colleagues would keep ABC going.

About 100 New Zealand centres are expected to continue operating independently.

Deputy Prime Minister and Minister for Education Julia Gillard would not confirm whether the Government was providing financial aid.

Nor would she detail contingency plans developed by her department this year, or by a taskforce established in late September. However, Ms Gillard confirmed the Government had been helped by insolvency practitioner PPB Australia.

ABC had been in the process of restating past accounts, through new auditors Ernst & Young.

Yesterday, former chairwoman Sallyanne Atkinson confirmed she had been interviewed by the Australian Securities and Investments Commission about ABC's finances.

She said there were no irregularities in ABC's finances during her time as chairwoman, which ended in May this year.

"I accept responsibility for what's happened and I don't think we should have expanded as fast as we did," Ms Atkinson said. "But the truth will come out eventually and I'm looking forward to that."

Ms Atkinson also defended ABC's founder and former chief executive, Eddy Groves.

"I have great appreciation for Eddy," she said. "I think the company was started by people with great entrepreneurial spirit, but most entrepreneurs take risks. And like many entrepreneurs, it was just too much too quickly."

ASX corporate relations manager Matthew Gibbs said ABC would remain listed and suspended from trading, awaiting a decision from the administrators about whether to delist or hand the company back to the directors.

Ferrier Hodgson was expected to issue a circular to creditors today, and will host a creditors meeting on November 18.

FALL OF THE GIANTS

CORPORATE COLLAPSES

ABC LEARNING CENTRES

- Owes its bankers up to $1.4bn

- Top market cap $3.4bn December 2006

- Final market cap $296m August 2008

ALLCO FINANCE GROUP

- Owes its bankers almost $666m

- Top market cap $4.6bn February 2007

- Final market cap $52m October 2008