Two Australian billionaires are making a last-ditch effort to stop CBS from taking over Ten

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Billionaire Network Ten backer Bruce Gordon and the Murdoch family’s 21st Century Fox have each made last-ditch pushes to thwart the purchase of the failed network by America’s CBS.

Lawyers for Mr Gordon are arguing that administrators should have considered selling the business to Mr Gordon’s private company Birketu and Lachlan Murdoch’s Illyria Nominees Television which were shareholders in the group ahead of its collapse.

WIN Corporation, which is majority owned by Mr Gordon, made an urgent application to the NSW Supreme Court on Wednesday to allow it bring on a court hearing later this week.

The application by WIN was made on behalf of its CEO and Ten director Andrew Lancaster who claims he has not been paid his directors fees.

The challengers led by WIN are seeking to push back the date of the next creditors meeting for Network Ten which is scheduled for September 12.

They are also seeking rights for all shareholders to vote on the proposal and for the weighting of CBS’s vote to be reduced to $1. CBS is Network Ten’s largest creditor due to Network Ten holding a $172 million debt to the US group.

21st Century Fox is also understood to be preparing to front court this week alongside WIN Corporation to have its complaints heard about how the administration has been conducted. Comment has been sought from the company’s US offices.

Hearings will be held on Thursday and Friday in the Supreme Court of NSW before Justice Ashley Black to determine whether the meeting should be held at a later date.

WIN and its fellow challengers will ask the court for KordaMentha to reveal “the expected value of any tax benefits to CBS (whether in Australia or in an other jurisdiction) as a result of CBS acquiring shares in Ten Network”.

They will also seek information on whether Network Ten will be capable of trading as a going concern in the event that the Proposed CBS DOCA is approved and the transaction is completed given the secured debt of $172 million owed to CBS.

A flurry of legal activity took place on Tuesday and Wednesday as lawyers for Mr Gordon and fellow Ten backer Lachlan Murdoch informed administrators from KordaMentha of their concerns about the second report to creditors.

Network Ten collapsed in June after Mr Gordon’s Birketu and Mr Murdoch’s Illyria said they would not extend their guarantee of $200 million of the media company’s debt. This followed the exit of James Packer as a backer for the financially troubled network.

In a searing letter from lawyers for Mr Gordon’s private company Birketu and WIN Corporation seen by Fairfax Media, John Atanaskovic described KordaMentha’s report as including “defective disclosure” after an initial review of the document.

“Even on cursory inspection, however, it is clear that the report obviously fails properly to discharge the obligation of setting out the [administrators] reasons for those opinions,” he said.

The letter adds the report does not include an independent expert report, does not include sufficient analysis of the alternative proposal put forward by Mr Gordon and Mr Murdoch’s private companies and fails to properly explain the transaction deed or financing from CBS. Independent expert reports are generally included in the final deed and not in creditors reports.

The letter also includes concerns that the CBS transaction does not allocate any votes to shareholders “in their capacity as contingent creditors in class actions against Ten”.

In a second letter to KordaMentha, sent on Wednesday, Mr Atanaskovic said WIN was not properly listed as a creditor.

“WIN is owed a liquidated debt by Network Ten in respect to unpaid amounts under a program supply agreement between WIN and Network Ten,” Mr Atanaskovic said.

Illyria is believed to have voiced separate concerns to KordaMentha.

A spokesman for KordaMentha said the insolvency house “has no plans at this stage to defer the Second Meeting of Creditors scheduled for Tuesday 12 September”.

“The report to creditors was comprehensive and compliant,” he said.

This article was originally published by the Sydney Morning Herald’s Business Day. Read the original here, or follow Business Day on Facebook.

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