Feltex trial takes break

The first part of the Feltex trial finished at the Auckland District Court yesterday with the five directors not back in court until the end of next month.

The directors - Tim Saunders, Peter Thomas, John Feeney, John Hagen and Peter David Hunter - are defending allegations the company's half-year accounts to December 31, 2005, did not disclose it was in breach of its loan agreement with ANZ.

All have pleaded not guilty. This week, Saunders, Thomas and Hunter took the stand in their own defence.

The directors have conceded the interim financial statements to December 31, 2005, failed to disclose Feltex was in breach of its loan agreement and that its debt was incorrectly classified as non-current.

But they maintain at the time the statements were filed they believed the company's accounts did comply with the newly adopted international financial reporting standards (IFRS).

To ensure compliance, Feltex hired Ernst & Young to do a review and to help the company's own audit committee on the application of IFRS.

Thomas told the court that Ernst & Young confirmed the accounts were compliant and the directors relied on that.