01/10/2009 - 00:00

ASIC funding for Kleenmaid probe

01/10/2009 - 00:00

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THE corporate watchdog has agreed to fund an investigation into the collapse of failed white goods business Kleenmaid that could pave the way for criminal charges to be laid against the company's directors.

ASIC funding for Kleenmaid probe

THE corporate watchdog has agreed to fund an investigation into the collapse of failed white goods business Kleenmaid that could pave the way for criminal charges to be laid against the company's directors.

The Australian Securities and Investments Commission this week approved funding for an investigation into Kleenmaid and 14 companies within the group.

Liquidator Richard Hughes, from Deloitte, said the investigation would focus on insolvent trading.

"We will provide a detailed report to ASIC and then it is their decision whether or not they will bring a criminal case against the directors," Mr Hughes said in a statement.

"At the same time the liquidators will use the findings of the investigation as the basis for any civil action that we may bring to recoup monies on behalf of creditors."

He said an update on the investigation would be provided in the next few months.

Founding directors Andrew and Brad Young could be held personally liable for the company's collapse.

Insolvent and dishonest trading can attract a jail term of up to five years and a fine of $220,000, as well as disqualification as a company director.

Kleenmaid went into voluntary administration in April, with 150 staff losing their jobs and hundreds of confused and angry customers owed a total $27 million in goods.

The company had more than 10,000 creditors and 15 of its 20 stores were franchised.

Creditors, who are reportedly owed $102 million, agreed in May to wind up and liquidate the Kleenmaid Group after it was found to have debts of more than $80 million.

Andrew Young said in a statement he was disappointed ASIC had taken the action.

"We do not believe there is sufficient evidence to warrant any further investigation into the failure of the business," he said.

"We would like to again express our sincerest sympathies to our customers and creditors who are facing financial loss as a result of the company's failure.

"In hindsight, we acknowledge we could have done better in dealing with the global financial crisis and the enormous pressure it placed on our business but reject any notion the business traded while insolvent.

"We will continue to cooperate with all relevant authorities." Deloitte will gather evidence and prepare a report to help ASIC decide whether charges against the directors should be laid.

 

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