Liquidators' report paints dark picture of Datasouth
- 07 April, 2011 22:00
IT solutions provider Datasouth, which went into liquidation on March 31, owes millions of dollars to more than 80 potential creditors according to a preliminary report by the company's appointed liquidators.
Craig Melhuish and Keiran Horne, HFK chartered accountants appointed as liquidators for Datasouth, have released their first report on the company’s liquidation.
The report includes a long list of creditors but, as a preliminary document, many of the estimates are yet to be completed. The report does state, however, that Datasouth owes Ingram Micro $519,550.
Datasouth Business Solutions' deficit to creditors, subject to costs of liquidation, reaches $27,321,058. The initial estimated amount of assets available to preferential creditors, general security holders and unsecured creditors is listed in the preliminary report at $206,456, is likely to be higher.
The liquidators' report is not good news for most creditors as it states that Datasouth employees and Inland Revenue will have to be paid first. According to the report, employees are owed nearly $200,000 (gross) in total, up to $18,700 per employee.
“Subject to further verification, we estimate that there will be no funds available to unsecured creditors,” the report states.
“At this stage, there are insufficient funds to pay these preferential and secured creditors,” say the liquidators. “However recovery actions through voidable transactions and actions against certain other parties may bring in additional funds.”
The report also states that “the company was wound up by the director/ shareholder of the company”. “The director attributes the financial position of the company to the competitive nature of the industry and the departure of key personnel.”
Datasouth managing director Gavin Bennett told Reseller News the report “does not value a number of assets”. For that reason, and based on legal advice, Bennett said he couldn’t make any further comments.
Among the creditors listed in the preliminary report are government agencies including ACC; technology distributors Exeed and Synnex, and quite range of other businesses, including Fairfax New Zealand, Ltd, the company that owns Reseller News.