Manabars in liquidation, restructuring plan fails
- 03 June, 2008 22:00
A proposed restructuring plan to save Manabars Technologies has collapsed following the threat of legal action, and the company has been placed into liquidation by the High Court.
Liquidators PricewaterhouseCoopers, in a first report, say they are still assessing whether the technology is operative and can be marketed for sale, and the impact of a licensing agreement between Manabars IP Ltd and Manabars Technologies on the ability to sell the technology to third parties.
The company had defaulted on its obligations to pay GST and PAYE, amounting to more than $161,000, and the Inland Revenue Department had petitioned to put it into liquidation.
The liquidators say an investigation into the company will be conducted to determine if any insolvent transactions had occurred and if there had been any breaches of legislation by the company or its officers.
They estimate that if any dividend is to be paid, it will be paid by April 30, 2009, and the liquidation finalised by June 30, 2009.
Investors in Manabars Technologies were told last November the company had failed to raise $1 million in funding and was insolvent. Manabars had developed a technology it said delivered a new and secure way to link computers over the internet.
Chief technical officer David Hughes told Computerworld at the time that a number of investors had approached him to continue developing the technology. The intellectual property was owned by Manabars IP Ltd.
In a press release issued last July Manabars Technologies said approximately 200 shareholders had invested more than $1.5 million, with New Zealand government grants contributing more than $100,000. Had the company managed to raise the additional funding, a proposed share issue and price would have valued it at $20.6 million.
Hughes wrote to shareholders of Manabars IP in January, summarising a December shareholder meeting where resolutions passed included issuing a non-expiring licence to III Technology Ltd (3iTec) to use the Manabars Technology. He said he was the sole director of 3iTec, which was owned by Bukalaka Investments.
Because of legal and technical issues, he proposed creating two classes of shares in 3iTec: A Class shares with voting rights, and B Class with no-voting rights. Cash investors and sweat equity shareholders would be treated equally by being issued B Class shares in equal proportion to those previously held.
In a further letter, dated March 11, he said it had been disclosed that prior to Manabars Technologies declaring insolvency, loans had been made to several parties which were later converted into shares at a fraction of the price any other shareholder had paid. These shares would have to come by diluting the value of those held by the sweat equity shareholders.
Since then, Hughes wrote, lawyers representing one of the parties had advised that a High Court injunction would be sought against issuing the proposed non-voting B Class shares. There was a further legal threat by lawyers representing un-named shareholders threatening to sue a potential investor if it used any part of the intellectual property in the work 3iTec was doing on a product. This caused the investor to review its investment in 3iTec.