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ABC Learning Centres was on the brink of collapse last night, with its board meeting to prepare to hand over management of the company to insolvency firm Ferrier Hodgson today.
The company's banks, which together are owed an estimated $850 million, were set to appoint McGrathNicol as receivers to ensure they could recoup as much of their loans as possible.
Insolvency firm PPB yesterday confirmed that a partner, Steve Parbery, had been "consulting with the Federal Government" and was on standby to look after its interests.
The Government subsidises the care of more than 100,000 children at ABC's centres.
ABC yesterday attempted to reassure parents and investors, saying that talks were continuing with its banks and the Government to secure its future.
But it is understood that a Ferrier Hodgson partner, Peter Walker, will today take the reins of the empire which was once worth more than $4 billion.
Only last week the Commonwealth Bank moved to protect its loans of at least $600 million with an unlimited charge over ABC's assets, which include more than 1200 centres throughout Australia and New Zealand.
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The company had attempted to avoid collapse by selling assets, including the majority stake in its US business and its British Busy Bees Childcare business, but it was not enough.
Its shares have been in freefall since the new accounting method revealed just how badly the company's core Australian childcare centres were really performing.
It triggered a series of profit downgrades and revelations of other third-party payments which appeared to have artificially inflated ABC's earnings.
The imminent appointment of administrators comes after the company missed four consecutive deadlines it had set itself for the release of its revised financial accounts.
At its peak, ABC was the largest publicly listed child-care operator in the world and a sharemarket darling, with a market capitalisation of $4.1 billion.
But its shares remain suspended at 54c, valuing the company at just $296 million.
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- reprinted from the Sydney Morning Herald