Stockford saga draws to a close

Thefinal practice in the embattled financial services groupStockfordhas been sold, and creditors have agreed to a proposal which is expected to see them paid in full.

Administrator KordaMentha has reached an in-principle agreement to sell the Kent Street, Sydney practice, the last of Stockford’s 67 business units, to the principals of the business.

At the timeMoney Managementwent to press, KordaMentha was in final negotiations and preparing contracts for the sale.

Last week, creditors also voted to accept a Deed of Company Arrangement (DOCA), under which secured creditors would be paid in full, and unsecured creditors would receive a return of between 50 and 100 cents in the dollar.

Mark Korda of KordaMentha says the administrators expect to receive proceeds of $19 million to $20 million from the sale of the business units.

“Secured creditors and all employee entitlements and costs are estimated at $10 million to $11 million and will be paid in full,” Korda says.

The total amount of unsecured claims is estimated at $10 million to $20 million, but difficulties in estimating the value of contingent and disputed claims have resulted in the wide range of possible returns for unsecured creditors.

KordaMentha will shortly be initiating a proof of debt process, with the first disbursement to creditors expected by October 31, 2003.

The administrator recommended undertaking a DOCA rather than winding up the companies as it felt this would be less costly, quicker to implement, more efficient and therefore in the best interests of creditors.

KordaMentha was appointed as administrator at the end of February when the Stockford business failed. More than a third of the principals of Stockford practices opted to buy back their businesses.