Failed stockbroker BBY had been losing money for about 18 months before it went under, according to investigations by administrators KPMG.
Stephen Vaughan and Ian Hall of KPMG say the accounting and financial systems were inadequate and the broker was feeling pressure on margins, operating costs and overheads.
“These were the issues which were more apparent,” the administrators said in a briefing following the creditor’s meeting today.
Vaughan and Hall today faced a two-hour meeting behind closed doors with about 150 creditors. “Quite rightly a lot of people were frustrated,” they said.
People with money in client management accountants were concerned about whether and when they would get their funds back.
“There were a lot of people wanting to know whether they were going to get their money and what process they have to go through,” the administrators said.
“We spent a lot of time talking to people individually before the meeting as well. The meeting was quite orderly.”
Among those at the meeting was Glenn Rosewell, son of tennis great Ken, the executive chairman and majority owner of BBY, who called in administrators at the start of last week with mounting liabilities from the options trading unit.
KPMG told the creditors that it couldn’t yet put a total figure on the liabilities. “Any number we could give will be wrong,” they said.
There are 55,000 client accounts but the administrators are still trying to find out how many of these are active.
More information would be available at the second creditor’s meeting next week, where either a scheme would be accepted by creditors or the business would go into liquidation.
George Wang’s AIMS Financial is still negotiating to buy a piece of the business. He’s already offered employment contracts to some of the staff.
The week before BBY went under, AIMS Financial had been looking at tipping in up to $3 million in exchange for equity.
Since then, the receivers, Stephen Parbery and Brett Lord of PPB Advisory, have been finding more liabilities as they dig into the books.
More BBY coverage:
- All staff at failed stockbroker BBY have been made redundant
- A broker watching the BBY failure explains why options trading is a ‘mug’s game’ for most
- $2 billion Australian stockbroker BBY is falling apart
- A possible buyer is looking at failed stockbrocker BBY
- Failed stockbroker BBY would have been badly hurt by the reversal in bank stocks
- Clients of stockbroker BBY scramble to save positions