Creditors have been told by Arrium administrators KordaMentha that the company should be sold to the highest bidder, rather than liquidated, and that the group may have traded while insolvent prior to its April collapse.
AAP reports that KordaMentha’s report said a better return for creditors was more likely than if the businesses were liquidated.
The administrators’ report, dated October 26, also said there were “a number of transactions” entered into within the Arrium group that warranted investigation. Investigations would continue if a sale process is approved at a second creditors meeting, to be held Friday next week.
“We are not in a position to provide final comments about potential offences that may have been committed or amounts of money that may be recoverable in the event any of the Arrium Group of companies are placed into liquidation,” KordaMentha wrote to creditors, according to the ABC.
These include a rescue package involving US vulture fund GSO Capital, which was knocked back by lenders, who would’ve received only 49 cents in the dollar.
“We continue to investigate whether finance facilities were continued to be drawn down either when the Arrium Group Companies were insolvent or when they were aware that the GSO Proposal, if accepted, would result in the financiers receiving substantial discount on the face value of the debt advanced,” advised administrators.
“To the extent that this can be established there may be claims against the directors.”
The steel and iron ore business entered voluntary administration in April, with debts of roughly $4 billion.