Software development integrator RHE and Associates is in receivership, after its parent company transferred the assets and customer contracts to sister company RHE Infrastructure Services (IS).
Director Damian Archbold, who is also a director of RHE IS and parent company Investors Guaranty, says RHE and Associates had been growing since Investors Guaranty invested in 2003. He says it had a positive balance sheet and was “slightly profitable”, but had suffered during the latest economic downturn and foresaw future difficulties. He says Investor’s Guaranty wasn’t willing to put more money into RHE and Associates, adding retained earnings were not enough to manage cashflow effectively.
“The Christmas season is always difficult in this business. For us it became apparent that during that season we would have cashflow problems,” says Archbold. “Because we have sister companies in the same space, we didn’t want to have to put more money into one of those companies at the risk of under-funding some of the others.”
RHE IS (infrastructure services) works closely with RHE and Associates where infrastructure services are required, says Archbold, adding RHE and Associates has worked with staff and clients to ensure a smooth transition to RHE IS.
“It wasn’t a dramatic receivership,” he says.
RHE IS will continue to work on the existing software development and integration contracts held by RHE and Associates, and could extend these, but its major focus in future will now be infrastructure, says Archbold.
Not all RHE and Associates’ employees and contractors have moved to the RHE IS business. Archbold says “billable people” working on projects made the transition, but some senior management and administration staff did not.
He says of the 30 to 40 staff, about a third have not carried on with the IS business.
Receivers PKF Corporate Recovery and Insolvency were appointed on 18 November in favour of Investors Guaranty New Zealand, and the first report is due on 28 January, 2011.