ABC Learning creditors will meet in Brisbane late next week to decide whether to take heed of administrators' advice to wind up the group of companies.
Ferrier Hodgson administrator Gregory Maloney wrote to creditors on Thursday recommending the companies be placed into liquidation.
"I do not believe the administration should end, with the control of the companies reverting to the directors," he wrote.
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Liquidation recommendation
"Accordingly, it is my recommendation that the companies be placed into liquidation."
The meeting will be held at Tattersall's Club, in the Brisbane CBD, on Friday, March 26, at 11am (AEST).
Creditors will also consider whether to adjourn the meeting for up to 45 days to allow current negotiations for the sale of more than 700 individual Australian childcare businesses to be finalised without any negative implications arising from entering into liquidation.
During the meeting, creditors will consider a report recently released by administrators on the business, property and financial circumstances of the ABC Learning companies.
The creditors will then decide to either: end administration; have the ABC Learning companies execute a deed of company arrangement; or wind up the company.
Poor operating blamed for downfall
If the creditors decide the company should be wound up, they will then consider the appointment of a committee of inspection.
In his 37-page report to creditors, Mr Maloney said it was his preliminary view that poor operating performance and rapid growth without an appropriate strategic framework was ABC Learning's downfall.
He said other matters that required further investigation were the possible breaches of duties by directors and former auditors.
"Whilst investigations are continuing I am unable to determine the strength of possible causes of action available to a liquidator or quantify the potential recoveries available to the companies," he said.
$1.5 billion debt
"As it is my opinion administrations should not end, I recommend the companies be wound up."
Before its downfall, Eddie Grove's ABC Learning dominated the Australian childcare industry and expanded rapidly to become the world's biggest childcare operator.
But in November 2008, receivers McGrathNicol took over after the company had racked up debts of $1.5 billion.
Australian taxpayers have so far forked out about $60 million to keep ABC Learning centres open.
