Liquidators hope the contents will shed light on what led to the firm's collapse Ernst & Young has been ordered by a judge to hand over audit, restructuring and 'internal review' documents relating to Akai Holdings, the collapsed flagship of businessman James Ting. The Big Four firm must also furnish liquidators of Akai with all correspondence between itself and the former consumer electronics giant from January 1996 onwards. Ernst & Young audited Akai between 1996 and 1999 and also provided tax, financial and restructuring advice before it crashed with debts of more than US$1 billion in 2000. Former Akai chairman Ting was arrested in May after a two-year absence from Hong Kong. Attempts to trace and seize Akai's assets have resulted in just US$2.39 million being identified by liquidators. There are a number of major assets which have become worthless or non-traceable - including land and buildings with a net book value of US$377.1 million in the 1999 accounts - and at least six substantial transactions require further investigation, according to liquidators. However, the process has been hampered by a lack of documentation, prompting court action by liquidators from RSM Nelson Wheeler to glean information made available by Akai to Ernst & Young. Years of exchanges between the official receiver, liquidators and Ernst & Young concerning books and papers relating to Akai culminated in court action last month, with the accountancy firm agreeing to hand over all papers except those prepared for the firm's internal review. In a judgment by Madam Justice Susan Kwan recently made public, it was forced to hand over these internal papers. Ernst & Young intends to appeal the decision. The contents may include information relating to the management of Akai at the time of the audits and queries raised by Ernst & Young. 'I am mindful that the disclosure of the internal review documents might expose [Ernst & Young] to the risk of a negligence action by the liquidators if these documents should reveal any breach of duty on their part,' the judge said. However, she concluded that the risk of oppression 'is plainly outweighed by the reasonable requirement of the liquidators to have access to the internal review documents'. As far as the other documents are concerned, the judge said she believed they were 'reasonably required' to enable the liquidators to carry out their duties. She also referred to the 'massive scale of the liquidations, the highly unusual or doubtful transactions which had taken place not long before petitions were presented', and the specific transactions requiring investigation. There was a notable slump in Akai's total assets and net assets in the 12 months before its liquidation. By the end of January 2000, total assets stood at US$264 million compared with $2.32 billion in January 1999. Major assets once owned by Akai, such as the Akai trademark, have also been discovered by liquidators to be owned by Grande or Toyo Holdings. Six transactions have been additional cause for concern, including an investment in Shenzhen Kaifa Technology or Merrywide for US$39.5 million, which was transferred to third parties. There was also a guarantee by Akai of $51.4 million due by two firms, Goaltop and Gold Talent Ventures, which resulted in Akai being liable to pay the same to Grande subsidiaries. 'Any prejudice that may be suffered by Ernst & Young is outweighed by the public interest in requiring them to give assistance to the liquidators in this situation,' the judge ruled.