Edge liquidation likely

Edge liquidation likely

A preliminary report by Edge's voluntary administrator has recommended the group be liquidated, revealing the company has been unable to pay creditors since June 1999.

The report, signed by Armstrong Wily & Co partner Andrew Wily, has revealed Edge's 1998 operating profit amounted to just $1,272,296, with revenue of $389,464,104. By 1999, the company was operating at a loss of $2,985,780 with revenue of just $213,571,143.

"It is obvious that sales have been declining over the last couple of years with the corresponding impact on profitability," the report says.

By March this year, Edge had already lost almost $3.5 million. The group is likely to be liquidated when creditors meet in Sydney early next week.

Most of the group's assets relate to receivables from overseas operations in several different countries. However, most of these overseas businesses have closed up or had administrators appointed and there is little likelihood of recovery, according to the report.

Edge has been struggling for over a year to pay creditors. In August last year, Microsoft commenced court proceedings to recover around $12,900,000, while another unnamed company is still owed $4 million.

"These two liabilities raised concerns as to the ability of the company as at 30 June 1999 to pay all its debts as and when they fell due. The only alternative is for the Edge Group to be wound up," the report recommends.

Concern has also been raised over the amount of money flowing overseas in the last three months, particularly to Hong Kong.

Armstrong Wily & Co will release a more detailed report in two months.

Meanwhile, Edge employee will likely miss out on entitlements, unless the money can be recovered from stock and cash assets.

While a liquidator could pursue director Johnson Wang for insolvent trading, the difficulty lies in whether payments could be recovered, given that Mr and Mrs Wang are believed to have left the country.

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