THE controversial sports sponsor and fuel technology company Firepower is facing insolvency, but the action to wind it up has come not from sporting stars owed hundreds of thousands of dollars, but its own lawyers.
The law firm Johnson Winter and Slattery was hired by Firepower's chairman, Tim Johnston, and its former chief executive John Finnin to bring four defamation actions, two against The Sydney Morning Herald and two against the Herald journalist Gerard Ryle, for articles that appeared in January last year.
But the law firm, which no longer acts for Mr Johnston and Mr Finnin, has filed an application in the Federal Court to wind up the company and wants McGrath Nichol to be appointed as liquidator. The Australian Financial Review reported that Firepower had failed to respond to a statutory demand for $69,308 in unpaid legal fees.
The news may prompt a rush of creditors this week filing their names to the case before the court. The Herald has reported that prominent athletes such as Matt Giteau, Drew Mitchell and Ryan Cross, most Sydney Kings basketballers, the boxer Paul Briggs, the Western Force Super 14 club, Austrade and scores of small businesses have not been paid.
Firepower raised more than $80 million from investors, some of whom hoped to make a tenfold return on their money when the company listed on the London Alternative Investment Market.
Some Adelaide Crows players headed by Mark Ricciuto, Simon Goodwin and the coach Neil Craig, as well as the troubled Wayne Carey, invested heavily in the company, as did a phalanx of mum and dad investors and small superannuation funds. The high commissioner to Pakistan, Zorica McCarthy, and her two daughters were also investors.
Mr Johnston was before the Industrial Relations Commission last Friday for failing to pay wages to Sydney Kings basketballers last month. The Tax Office is also investigating his failure to pay superannuation to the players since last December. On Wednesday the National Basketball League is expected to formally withdraw Mr Johnston's licence to operate the Sydney Kings.
The Herald revealed in a series of articles the troubles of Firepower and the swathe of unrest it created in sporting, diplomatic and financial circles.
The Australian Securities and Investments Commission told the Federal Court last year that its investigation into Firepower was focusing on "false, dishonest, misleading or deceptive" conduct. The commission said it suspected that the company offered securities without a current disclosure document, operated without a financial services licence and engaged in dishonest conduct in relation to financial products.