The last of Nine's lives?

Unsecured creditors of Nine who have not made sure they were paid quickly will be on the edge of their seats today.

The directors appear to have finally told the players in the deadly creditors poker game that they either come to a compromise this week or the administrators will be called in.

Once the administrators are called in, at least on a legal basis, unsecured creditors on that date will not be paid.

In the case of Nine the position has been widely publicised but around Australia there are a vast number of smaller and medium sized businesses that are on the edge of receivership.

Their suppliers are at risk of loss because in most cases when the company collapses there is nothing for unsecured creditors.

Last month I warned Nine's unsecured creditors, including almost all suppliers of goods and services, to make sure their payments were up to date (A warning for suppliers distressed to the Nine, September 26). Since then the company has continued to trade.

I am sure the directors have the best possible legal advice, but as an outsider, I wonder if Nine directors may find their creditors asking if they are trading while insolvent.

In that case it will be the directors personally who will have to pay. I emphasise that this is not a prediction because I am not close enough to the technical situation. Nevertheless it is a clear danger.

If I was a Nine director I would make sure that the holders of the first ranking security guaranteed that all unsecured creditors were paid. Hopefully they have done that.

Nevertheless unless there is such a guarantee, if I was owed a lot of money unsecured by Nine I would be banging on the table today demanding immediate payment.

Even then there would be a question if preference.

It is very rare for there to be such a long period of administration speculation given the legal personal dangers to directors.