Two Austock Group subsidiaries have agreed to settle a multi-million-dollar legal battle with the group formally known as ABC Learning Centres Ltd.
In a statement to the Australian Securities Exchange yesterday, the subsidiaries, Austock Property Services Pty Ltd (APS) and the group formerly known as Austock Corporate Finance (ACF) Pty Ltd, said they had agreed to settle claims of around $2.7 million made by the liquidators of ABC (now known as ZYX Learning Centres Ltd).
"The claims, which were disputed by APS and ACF, were settled without any admission of liability," the statement said.
"Austock cannot disclose the amount of the settlement payment because the terms of settlement are confidential. However, the amount of the settlement payment is not material to the financial position of Austock."
In December last year, the financial services firm said it had received letters of demand from lawyers acting for ABC, claiming payments Austock made during the six months prior to ABC going into voluntary administration were recoverable as preference payments under sections of the Corporations Act 2001.
Two payments were under question, the first being $1 million in corporate advice fees paid by ABC to ACF on 14 October 2008 in relation to the sale of the ABC United States business to Morgan Stanley Private Equity, completed in June 2008, Austock said.
The second payment is $1.7 million in fees paid by ABC to APS on 4 November 2008 for ongoing property services.
In October 2010, the former chief executive of the failed childcare centres, Edmund Groves, filed a $7.4 million legal action against Austock.
In early September that same year, Groves sent a letter of demand to Austock alleging that on 27 February 2008 he gave an order to Austock to sell around 5 million company shares at market price.
Groves alleged Austock did not execute the order, leaving him to suffer losses of about $10 million.
According to the company's full-year results, Austock, through its Austock Childcare Fund, leased a total of 519 childcare properties to ABC.
In November 2008, ABC was placed in receivership, effectively freezing the rights of the fund and threatening the fund's income and capital structure profile.
