Creditors vote to liquidate One.Tel

One.Tel collapsed two months ago with debts of at least $300 million

By CNN's Geoff Hiscock
Asia business editor

SYDNEY, Australia (CNN) -- Creditors voted Tuesday to liquidate One.Tel, the failed junior telco whose investors included Australia's two biggest media groups.

One.Tel collapsed on May 30 with debts of at least $300 million. Its directors included James Packer and Lachlan Murdoch, the sons of media tycoons Kerry Packer and Rupert Murdoch.

About 300 creditors at the meeting in Sydney Tuesday voted to liquidate the company. They can expect to receive between 20 and 50 cents in the dollar.

The 1600 staff laid off in June will receive their full entitlements, according to administrator Steve Sherman of Ferrier Hodgson.

Sherman said the return to creditors depended on what happens with the sale of One.Tel's wireless spectrum and the actions of the largest creditor, Lucent Technologies, which has lodged a claim for about $488 million.

Issue of insolvent trading

COUNTRY PROFILE At a glance: Australia Provided by CountryWatch.com    CNN.com Asia More news from our Asia edition

Sherman also said the liquidation would address the issue of insolvent trading and directors' liabilities.

Documents released last month suggested One.Tel could have been insolvent for more than five months, but a second report by the administrators 12 days ago said it most likely became insolvent "between March and the end of April."

One.Tel's major shareholders included News Limited and Publishing & Broadcasting Ltd (PBL), which between them invested about $460 million in the telco's development and held a stake of 41 percent.

One.Tel's spectacular collapse angered and embarrassed PBL chairman James Packer and News chairman Lachlan Murdoch, who said they had been "profoundly misled" about the true state of the company's finances.

Murdoch 'unaware of cash crisis until May 27'

Murdoch said in an affidavit made public by the New South Wales Supreme Court that he did not become aware the company had a cash crisis until May 27.

Maxine and Jodee Rich have given undertakings not to dispose of assets

Jodee Rich, who with his One.Tel co-founder Brad Keeling was removed as co-chief executive on May 17, put a last-ditch proposal to the creditors' meeting Tuesday.

But his proposed deed of company arrangement was rejected by creditors, who voted almost unanimously to wind up the telco.

One.Tel's collapse is the subject of an investigation by corporate regulator the Australian Securities and Investments Commission (ASIC). It seized documents after raids on directors' homes and the One.Tel office on June 1.

On June 13, ASIC also won court-enforceable undertakings from Rich, his wife Maxine, Keeling and two other One.Tel executives that they would not dispose of assets until at least mid-September.