HARRIS SCARFE HOLDINGS LIMITED (ASX.HSL)

company deregistered today

the Liquidators advise that they have settled an insolvent trading claim against the directors and 12 unfair preference claims against creditors - the Receivers and Managers have settled their legal claims against the former auditors of Harris Scarfe and advise that there was no surplus arising from these settlements that would become available for return to unsecured creditors - the liquidators also note that ASIC has completed its investigations and finalised all legal proceedings against the management of the Group

the Liquidators are continuing to pursue the remaining 27 unfair preference claims against creditors - it may be some time before these claims are resolved in the Courts - there are still a number of issues that must be resolved before the Liquidators can conclusively determine whether a dividend will be able to be declared

liquidators advise that they are to examine an officer of the Chubb Insurance company in relation to a Directors' and Officers Liability policy

a claim for insolvent trading is filed by the liquidators against directors - this is likely to be a lengthy process

the Commonwealth Director of Public Prosecutions decides to discontinue the prosecution of Mr Adam John Trescowthick, formerly the Executive Chairman, and a director - this follows two trials in which the jury was unable to reach a verdict

Class Action - we understand lawyers Duncan Basheer Hannon have paid 5.5 cents per share as a result of the class action - arguably the total amount of the settlement and how much of it the lawyers received should be on the public record

in a circular to creditors following a meeting of creditors today, the liquidators state that "at this time we are not able to determine whether there will be a return to unsecured creditors - the key determinants ... are the outcome of alleged negligence proceedings, the outcomes of the liquidators' remaining unfair preference proceedings and the outcome of the insolvent trading investigation" (it is our understanding that convertible noteholders rank as unsecured creditors)

Class Action - we understand a settlement offer has been communicated to Group Members and the solicitors are due back in Court on 12 October to report on the response of members

the jury in the trial of Daniel Francis McLaughlin, in the District Court in Adelaide, was today discharged after being unable to reach a unanimous verdict, in relation to 17 charges arising from the Australian Securities and Investments Commission's investigation into the Harris Scarfe group - this is the second time a jury has not been able to reach a decision - McLaughlin was remanded on continuing bail to reappear in the District Court in Adelaide in one month's time

Class Action - we understand the mediation effort to be ongoing

Class Action - an agreement has been reached to hold a Mediation Conference on 3 March 2006 with the lawyers for the repondent's insurer Chubb Australia - the objective is to try to resolve the action on a commercial basis

Class Action - we understand the solicitors conducting the Class Action have been contacted by solicitors acting for Chubb Insurance who provided the D & O Cover for Harris Scarfe - they are hopeful that a way forward emerges from the discussions

Class Action - an amended Statement of Claim has just been finalised - the claim, which includes financial information not known at the time of the original claim, has increased in size from about 150 pages to about 360 pages - it now remains for the directors to prepare and file defences

the jury in the trial of Daniel Francis McLaughlin, in the District Court in Adelaide, was today discharged after being unable to reach a unanimous verdict in relation to 17 charges arising from the Australian Securities and Investments Commission's investigation into the Harris Scarfe group - he was ordered to reappear in the District Court in Adelaide on 19 April 2005

class action update - court makes further orders that the solicitors file an amended statement of claim - Adam Trescowthick's obligation to file a statement of defence will only arise when court proceedings against him are concluded in early 2006 - this is, and will continue to be, a drawn out process, but at least there is progress

class action update - Justice Mansfield dismisses the Disjoinder Application by a number of defendants in which they applied for orders that the proceedings no longer continue as a class action

Sam Davies and Colin Nicol of McGrathNicol are appointed by the Supreme Court of South Australia in place of Michael Dwyer

class action update - Duncan Basheer Hannon advise there is no change (since our note below of 21/10/2004)

reports that a former Harris Scarfe accountant, Anthony Wight, testified at the Adelaide Magistrates Court committal hearing of Adam Trescowthick that the falsification of accounts started five years before Trescowthick became executive chairman - Trescowthick is pleading not guilty to 37 dishonesty charges - prosecutors have alleged he instructed Harris Scarfe's chief financial officer, Alan Hodgson, to falsely inflate profits to about $36 million between 1998 and 2000 - but Mr Wight said he was first directed by Hodgson to falsify accounts in mid-1994, five years before Trescowthick was appointed

class action update - Duncan Basheer Hannon advise they still await the decision of Mansfield J. on the last of the 3 applications made by the former directors of HSL - the first 2 have been dismissed and while they are reasonably confident about the 3rd application, until the decision is handed down things remain at a bit of a standstill

class action update - Duncan Basheer Hannon advise they still await the court's decision prior to amending the Statement of Claim

class action update - Duncan Basheer Hannon advise it is their expectation that once Justice Mansfield hands down his decision (which they expect to require amendments to the Statement of Claim) they will be in a position to make those amendments almost immediately

class action update - Duncan Basheer Hannon advise they have completed the task of document inspection and are now attending to the amendment of the Statement of Claim by incorporating references to various documents - Justice Mansfield is still to deliver his decision on the strike out application that was argued in January

former chairman of Harris Scarfe, Adam Trescowthick, appeared in an Adelaide court today charged with 37 dishonesty offences related to the retailer's collapse - 17 counts of failing to act honestly as an officer of a company, 13 of failing to exercise powers and discharge duties, and 7 of procuring the dissemination of false information - he is the third HSL executive to face charges

class action update - Duncan Basheer Hannon continue to work on the company's documents - they have sorted out those they believe will be relevant to the case and in due course will amend the Statement of Claim to particularise allegations which are now supported by documentation - they will then be able to respond quickly once Judge Mansfield delivers his decision on the strike out application that was argued in January

reports that former HSL chairman Adam Trescowthick has been charged with criminal offences - he will face 37 counts of dishonesty relating to the company's collapse in 2001

a loss declaration has been issued and the capital loss can therefore be claimed in the financial year the declaration is issued

Duncan Basheer Hannon are still awaiting a decision in the "strike out" application - during June they will be inspecting company documents and anticipate they will then be in a position to amend the statement of claim

Duncan Basheer Hannon advise there has not been any decision in the "strike out" application (hearing 20-21 Jan 2003) as yet but at worst they expect orders to further particularise the Statement of Claim

Duncan Basheer Hannon advise members of the class action of developments which are essentially reflected in various notes below

Duncan Basheer Hannon issue a non-party Discovery action against the receiver and the liquidator of the company requesting orders allowing access to company records (we do not have a precise date for this) - they anticipate that there will be documents among the records that will confirm instructions were given by the board to Alan Hodgson

former chief operating officer DF McLaughlin committed for trial in relation to 17 charges arising from ASIC's investigation into the group

liquidator confirms that receivers and managers are still quantifying the various companies' legal claims against third parties

hearing in the class action originally listed for 11 December was adjourned until today - directors' legal representatives argue that Duncan Basheer Hannon had not particularised the basis upon which they alleged that various media releases and reports filed with ASX by Alan Hodgson were issued or filed at the request or direction of the directors

Daniel Francis McLaughlin former chief operating officer pleads not guilty to dishonesty charges - he was remanded to appear in court again on 31 January 2003

private consortium buy the department stores for an estimated $60m (book value at the time was evidently $154m)

liquidators confirm that any return to unsecured creditors and ultimately to shareholders will be dependant on the outcome of proceedings being taken against the auditors or any other proceedings that may be issued and the quantum of any judgment awarded by the Court pursuant to any proceedings - it may take 2-3 years therefore before the liquidator is in a position to provide a liquidators declaration or indicate whether there may be a distribution to shareholders

Duncan Basheer Hannon receive Notices of Motion from various firms of solicitors acting on behalf of the directors seeking to strike out the action on the grounds that there is no arguable case

Daniel Francis McLaughlin, formerly chief operating officer, today appeared for the first time in the Adelaide Magistrates Court on 17 charges arising from ASIC's investigation

delisted due to failure to pay annual listing fee

1800 shareholders have so far expressed an interest in the class action against former directors

advice that next directions hearing in class action against directors is scheduled for 11/12/2002

first directions hearing in class action against directors - they are directed to file their defences by 30 October 2002

former CFO of HSHL Alan Hodgson sentenced to six years in jail

liquidators advise may be considerable time before issues are resolved and declaration can be issued

liquidators advise they are unable to issue declaration enabling shareholders to realise capital loss

liquidators advise they cannot sanction any transfer of shares

Duncan Basheer Hannon issue proceedings in Federal Court for class action against former directors

former CFO of HSHL Alan Hodgson pleads guilty to 32 charges

Receivers and Managers launch $70m damages claim against the company's former auditors

Duncan Basheer Hannon invites shareholders to join class action

M J Dwyer & L P Maxsted (KPMG) appointed liquidators

resolution passed to wind up company

retail operations of group sold but not sufficient funds to pay ANZ Bank in full - the Receivers and Managers traded the businesses from 3 April 2001 until 19 November 2001

second statutory meeting of creditors

Ferrier Hodgson summons former officers to appear in court for a public examination

first meeting of creditors

company placed in receivership

Duncan Basheer Hannon allege shareholders misled by directors

Ferrier Hodgson appointed Receivers and Managers

ASIC commences investigation into HSL and related companies

M J Dwyer & L P Maxsted of KPMG appointed as joint and several Administrators

securities of the company suspended

chief operating officer resigns

name changed from Charles Davis Limited