Groves pleads not guilty to criminal charges over ABC Learning Centres collapse

Eddy Groves, the founder and former chief executive of collapsed child care giant ABC Learning Centres, has pleaded not guilty to one charge of breaching the Corporations Act at the Brisbane Magistrate’s Court today.

The charges, brought by the Commonwealth Department of Public Prosecutions follow an investigation by the Australian Securities and Investment Commission into allegations that Groves beached his director’s duties during the collapse of ABC in November 2008.

The maximum penalty Groves faces is five years in jail.

Groves’ lawyer told the court that the flamboyant entrepreneurs would vigorously defend the charge and wanted the matter resolved quickly.

Another ABC executive, Martin Kemp, was charged with three counts of breaching the Corporations Act. He was not required to enter a plea.

After starting ABC Learning in 1988, Groves built a child care empire that at its peak was worth $2.5 billion and spanned Australia, the United States and Britain.

But in 2008, the underperformance of the Australian operations and the company’s $1.6 billion debt began to cause problems for Groves, who lost the bulk of this shareholding – once valued at more than $300 million – in a margin call.

Shortly after the collapse, ASIC and the company’s liquidators began investigating ABC’s affairs, unearthing claims of poor disclosure, related-party transactions and mis-management.

The matter was adjourned for four weeks.