But Puisne Judge the Hon. Mr. Justice Ground also ruled that a good case was made for winding up all five Televest companies, and he rejected a request to dismiss the liquidators.

Further, Mr. Justice Ground discharged an order from the Chief Justice that the United Kingdom firm Price Waterhouse provide an undertaking against damages to Televest, should it be found a petititon to wind up the company should never have been brought.

Hearings on petitions to wind up Televest, Telecheck Holdings Ltd., CTRAK Ltd., TBL Ltd., and Compuguide Ltd. are scheduled to begin on March 28 and last at least two weeks.

Three Televest directors -- Mr. Richard Burns, Mr. Thomas Burns, and Mr.

Christopher Donnachie -- are fighting the petition to wind up Televest.

Their businesses operated the Signature and Travel Club credit cards and attracted more than $8 million from investors who were promised high annual returns on the purchase of preferred shares in Televest.

Represented by lawyer Mr. Julian Hall, the three directors asked Mr. Justice Ground to dismiss Mr. Charles Kempe and Mr. Gil Tucker of Kempe & Whittle Ltd.

as provisional liquidators of the five companies.

In what was described as a chain reaction, Mr. Kempe and Mr. Tucker were appointed provisional liquidators of the five companies between December 13 and December 17 after Sarnia Mutual Investments Ltd. of the United Kingdom sought repayment of substantial loans.

Sarnia, which was put into liquidation under Price Waterhouse in the UK in 1990, was represented in Bermuda by Appleby, Spurling & Kempe, the same firm which would represent the provisional liquidators.

That fact "gives me some concern,'' Mr. Justice Ground said in a 14-page judgment. "This has no doubt helped foster the impression that the joint provisional liquidators were in some way acting under the petitioning creditors' (Sarnia's) direction.

"I would have thought it much preferable if, upon appointment, they had sought their own legal advice...

"Although much of their work may now have been done I am going to direct them to seek alternative legal representation, and if they have any difficulty finding a firm with the necessary expertise who do not already have an interest in this matter they can come back to the Court for further directions.'' During a weeklong hearing that began on February 14, the concern was raised that by using the same law firm as Sarnia, the provisional liquidators could show preference to the interests of that creditor over others, like the 500 local investors in Televest.

Mr. Justice Ground said there was no reason to dismiss the provisional liquidators.

He noted provisional liquidators should not be appointed unless there was "a good prima facie case for saying that a winding-up order will be made''.

In other words, there should be a good case made on the face of the evidence.

It was not until the petitions were heard that it could be decided whether the companies should actually be wound up.

The judge noted that in each case the allegation of insolvency was based on figures provided by the companies' own accountants, Callaghan Nawrocki of New York City.

"It is plain from (those figures) alone that each of the companies, with the exception of Televest...is insolvent,'' Mr. Justice Ground said.

There was also a good case to be made for winding up Televest, which purportedly petitioned for its own winding up, he said.

It was unlikely that an insolvent Telecheck could pay its debts to Televest, and also doubtful that Televest directors could repay more than $2 million in loans from the company, he said.

"The attitude towards the assets of the company demonstrated by those loans was, of itself, sufficient to warrant the appointment of provisional liquidators,'' he said.

Also, "alleged irregularities in the conduct of the companies and the issue of prospectuses for the sale of shares'' suggested it was in the public interest for provisional liquidators to be appointed.

The Court was told the directors transferred hefty charges on their Signature cards to their loan accounts. There was also evidence that financial statements were used in the Televest prospectus without authorisation from the accountant who prepared them.

The question of the validity of a Televest shareholders' meeting at which members resolved to petition for the winding up of Televest would be resolved at the hearing on the petitions. Until then, Mr. Justice Ground said he had to rely on the company resolution entered as evidence.

Price Waterhouse, the liquidator of Sarnia, did not have to provide an undertaking against potential Televest damages, as ordered by Chief Justice the Hon. Mr. Austin Ward on December 29, Mr. Justice Ground said.

He said that orders for undertakings were made in cases in which arguments from both sides had not been heard. He had now heard from both sides and would not have ordered an undertaking, so "it is appropriate to discharge that part of the order,'' he said.

Also yesterday, lawyer Mr. Saul Froomkin of Mello, Hollis, Jones & Martin appeared before Mr. Justice Ground and said he represented about 135 preferred shareholders in Televest.

Mr. Froomkin said his clients might appeal to be substituted for Televest as the petitioner in the request to wind up Televest.

Mr. Hall said he would agree to the substitution, if it was made.