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CI Times Weekly | Current Issue 267 | 08 September 2008

PDL directors plead for understanding and support of creditors

The beleagured directors of PDL are making a plea for understanding and the support of creditors in accepting their offer of settlement of 60cents in the dollar.
The company has already agreed to provide accountant, Mike Carr with more information as conveyed to the meeting of creditors on Wednesday morning.
The plea is for local creditors not to let emotions get in the way of an agreement because the company is trying to do the best they can by the creditors and company director, John Wichman plans to address the creditors in Maori so they can understand the offer just what the company has proposed.
If the creditors agree to a court sanctioned managed wind up, they will receive a fair and proportionate distribution under the control and scrutiny of professionals of the funds that are already available as well as from debt recovery, the proceeds of which will passed on to the creditors.
The directors are concerned that creditors may not realize that any legal action and court appointed receiver will legally have prior call on any funds before the creditors. Therefore, the company is urging the creditors to accept the settlement which will allow them to receive their first tranche of payments as outlined in the letter of offer.
Right now the only assets of the company are some cash in the bank and debts to be collected from unsecured debtors to the company and if all goes well, PDL are hoping to bring in $600,000 but realistically it may be more like $500,000 because some debts may be unrecoverable. The company has also slashed costs with only one part time employee, the accountant, and the directors no longer receiving any income from the company at all.
PDL say they are happy to deal with Mike Carr because of his professional expertise as an accountant and auditor who has also had experience in liquidations and understands the process well.
When approached on Friday morning, PDL accountant, Kerry O’Meara explained the process to CI Times of what is described as a ‘managed wind up’ along the following lines. The letter of offer was sent to try and gain the support in principle of the creditors which is the first step for the ‘managed wind up’ process.
The reason that director, John Wichman and Dan O’Brien needed to go to New Zealand was in order to meet with the overseas creditors and gain their support because there was some suggestion that some were prepared to look toward legal action.
That could have led to all sorts of legal implications because the overseas creditors are in the majority in terms of moneys owed. However, after hearing the explanations by the director, the creditors have decided to make a ‘commercial decision’ and accept the negotiated settlement.
As confirmed by Mike Carr at KPMG, Wichman is due back on Friday afternoon and has already scheduled a meeting with him to provide more details.
O’Meara also told CI Times that Wichman also planned to explain their predicament to the local creditors in Maori so that the local suppliers could fully understand the settlement being offered.
They are hoping the local creditors will accept the offer in principle which can be put to a formal vote at a creditors’ meeting where questions can be put to the directors.
Depending on the approval of the creditors, the proposal will then be taken to the High Court for their official sanction after which distribution of 30% can be made to the creditors.
Right now they acknowledge that the issues have become clouded with emotions and recognize that the creditors’ meeting provided a good platform to voice their opinions. As soon as Wichman arrives back in the country on Friday 12 September, he plans to discuss the matter with Carr who appears to be the unofficial voice of the unsecured creditors and is willing to fully cooperate with the creditors and provide answers to a number of questions.
The company also wants to dispel the misinformation and unsubstantiated rumours that are being circulated around town saying they have acted in good faith throughout and were always assured at board meetings that that all was well and under control.