Queue of creditor banks nearly doubles in length as negotiations over restructuring and bailout begin Moulin Global Eyecare Holdings was placed in provisional liquidation yesterday, with creditor banks hoping that a rescue of the troubled company will salvage billions in outstanding loans. There were now 29 banks, led by HSBC Holdings, negotiating a restructuring of Moulin's $2.4 billion debt, said Rod Sutton, an executive director of Australian firm Ferrier Hodgson, appointed by the High Court as a provisional liquidator. 'It doesn't mean Moulin will go into liquidation,' Mr Sutton said. 'The focus will be on finding investors for the company and attempting a corporate rescue.' He said Moulin faced debts of $40 million to $60 million from trade creditors. The number of banks lining up to retrieve money owed by the world's third-largest spectacle maker, which has borrowings of $5.3 billion, has shot up. As of Wednesday, 16 banks had called in loans amounting to $946 million. HSBC recently started a winding-up petition against Moulin and applied for its provisional liquidation so creditors could secure its assets while provisional liquidators took charge and restructured it. Nonetheless, bankruptcy was a possibility facing Moulin, said John Marsden of law firm Johnson Stokes & Master, acting for HSBC. The hearing of the winding-up summons would be held on August 24. Moulin might be liquidated at that hearing, or it could be postponed to allow further time for rescue and restructuring, he said. Moulin's collapse would be Hong Kong's biggest corporate failure since consumer electronics firm Akai Holdings was wound up in 2002 after failing to repay $13 billion of debt. Moulin had been trying to negotiate a debt restructuring through its financial adviser, Anglo Chinese Corporate Finance. 'Because of the accounting issues, the banks lost confidence in the process but still want to see a corporate rescue,' Mr Sutton said. However, a source close to the restructuring effort said: 'I think the banks will break it up, further reducing actual value. The key is in keeping the vertical integration benefits in place.' In April, Moulin's auditor, Deloitte Touche Tohmatsu, resigned, citing concerns over trade records involving millions of dollars and weak internal controls. On June 21, Moulin admitted an independent financial adviser appointed by creditors had found apparent accounting irregularities beyond those reported by Deloitte. If fraud is uncovered, Mr Sutton said criminal charges might follow. Hong Kong Institute of Certified Public Accountants president Edward Chow Kwong-fai said the institute was investigating Moulin's accounting irregularities. 'We are contacting the financial officers, accountants and auditors who have handled the financial statements of Moulin,' Mr Chow told the South China Morning Post. Securities and Futures Commission chief operating officer Peter Au-Yang Cheong-yan would not confirm if the commission was investigating Moulin, saying it could not comment on individual cases. Moulin chairman Ma Bo-kee founded the firm with just $1,000 in a workshop in Kowloon in 1960 after arriving from the mainland as a spectacle-making apprentice in the 1950s. Mr Sutton said the company had excellent assets, including mainland factories and retail chain Eye Care Centers of America. Some analysts said it was Moulin's US$250 million investment in the chain in February that was its undoing, pushing its debt-equity ratio above 100 per cent. At the High Court hearing yesterday, another Ferrier Hodgson executive director, Desmond Chong, was appointed as a provisional liquidator. Moulin's lawyers and independent management did not contest the ruling.