A director of defunct start-up Manabars Technologies is asking shareholders to vest the company’s intellectual property back to another company, Manabars IP, on the promise of a major investment.
The move has come as a surprise to the liquidators of Manabars Technologies at PricewaterhouseCoopers.
Manabars Technologies was placed in liquidation by the High Court in April, but the company’s chairman, Allan Rutledge, sent an email to shareholders in July requesting they to agree to vest the intellectual property of Manabars Technology back to Manabars IP Ltd.
The email, leaked to Computerworld, also said that a “substantive funding source” had been identified. “We can state at this point that $6 million is available and that the new investment company will settle the outstanding debts of Manabars Technologies Limited,” says the email.
According to other documents received by Computerworld, Manabars IP held the intellectual property and licensed this to Manabars Technologies. The shares of Manabars IP were held in trust for the shareholders of that now defunct company.
Rutledge could not disclose the name of the investment company, or the full details of what was proposed, until the vesting process was completed, says the email.
Vivian Fatupaito, partner at liquidators PWC, was not aware of the email and would not say if it affected PWC’s process, other than that it adds another complexity to the investigation.
“We are still investigating the company and the email would be of interest to us,” she says.
PWC said in its first report, in May, that it is still investigating whether the technology is operative and can be marketed for sale. Manabars had developed a technology it said delivered a new and secure way to link computers over the internet.
When phoned last week, Rutledge had no comment.
Another potential issue is that, according to the Companies Office database, Manabars had not registered a prospectus.
“But whether they have to or not depends on if they are offering securities to the public and if they are relying on an exception,” says Kathryn Rogers, the Securities Commission’s director of primary markets.
The Securities Commission can’t comment on individual companies, but Rogers says that if companies are offering securities to the public, they need to register a prospectus. However, there are some exceptions to this general rule, she says.
Fatupaito confirms that Manabars did not have a prospectus, but whether this has led to a breach of legislation is an issue for the Securities Commission, she says.
“If we found a breach we would report it… but we haven’t done that at this stage,” she says.
Manabars defaulted on its obligations to pay GST and PAYE, amounting to more than $161,000, and Inland Revenue petitioned to put it into liquidation, says PWC’s report. Investors were told last November the company had failed to raise $1 million in funding and was insolvent. Chief technical officer David Hughes told Computerworld at the time that a number of investors had approached him to continue developing the technology.