Court challenge may remove smiles after dental deal offered

ADMINISTRATORS to failed Gold Coast dental group Smiles Inclusive have chosen to accept Genesis Capital’s offer to buy most of the company’s assets but a court challenge could stand in the way.

The Genesis deal means that Pacific Smiles co-founder Alex Abrahams has failed to have his offer accepted by administrators Luci Palaghia and

Timothy Heenan, of Deloitte.

In a letter to employees, dentists and joint-venture partners (JVPs) on January 15, Ms Palaghia and Mr Heenan said the next steps involved finalising details of the Genesis deal and talks with stakeholders.

The commercial terms of the deal will remain confidential “for the time being”.

The proposal is for a smaller company than the group Deloitte took to the market last year after Smiles fell into voluntary administration when it was unable to pay $20 million back to NAB.

There are 26 practices included in the Genesis deal compared to the original 49 in November.

It is understood Genesis won over some dentists and JVPs by stating it would not seek to compel anyone who did not want to become part of the new entity to take part.

It follows a 32-strong group of dentists and/or JVPs writing to Deloitte in December stating they would rather leave the company than become part of a new corporate entity.

As part of the sale process, one-on-one video conferences were held between the JVPs and dentists and the bidders.

Ms Palaghia and Mr Heenan said the feedback they received formed a key part of their decision-making process.

They said they planned to contact the “small number” of practices still trading that aren’t part of the Genesis deal about the next stage.

Genesis has confirmed it would retain the “vast majority” of head office staff at Burleigh and all other employees would be offered employment “on terms no less favourable than current arrangements”.

However, a potential roadblock has emerged for the deal.

On January 15, Smiles dentist and JVP Dr Henry Chen, with the backing of four other JVPs, filed an application in the Supreme Court seeking court orders for the administrators to hold a creditors’ vote on the proposals, including one backed by his group.

That would mean all creditors, secured and unsecured, would get a vote. Currently the unsecured creditors, mainly the JVPs, are unable to vote.