The Australian Business Network
Star Entertainment’s future was on a knife edge on Wednesday night, but lenders to distressed companies are hovering and are expected to hear by Thursday if it is entering voluntary administration.
A voluntary administration for the cash-strapped casino operator would enable all of its liabilities to be frozen.
This frees administrators up to work with the company’s assets without having to worry about paying its bills.
Star could then sell assets and find a sustainable way to continue to trade. The alternative is it enters liquidation.
Either way, the proceeds from what’s left in the business are divvied up among non-secured creditors once secured creditors are paid out.
In the case of Star, the secured creditors are its super senior lenders, owed $100m, and there is enough cash in the business to cover that debt.
The secured creditors also have to give their approval for any decisions made by the voluntary administrators.
No doubt the first thing a voluntary administrator will do (in the case of Star Entertainment it will be its existing adviser, FTI Consulting), is request an indemnity for staff payments from premiers in NSW and Queensland where it operates, an indemnity for staff payments….