Number One creditors get paltry payout

Creditors owed money in the liquidation of three Number One companies should receive a payout of just under five cents to the dollar.

Creditors owed money in the liquidation of three Number One companies should receive a payout of just under five cents to the dollar.

The Number One Software Company (also known as Carloway) was put into liquidation in April last year, and shareholders put The Number One Service Company (also known as Lauder) and The Number One Computer Company (also known as Flint) into liquidation last August.

Leearna Waghorne, a partner in the firm McDonald, Vague & Partners, which is handling the liquidation, says there are no preferential or secured creditors. Unsecured creditors' claims total more than $1.3 million.

Waghorne says the payout, which she had expected to be made by early this month, has been delayed by some creditors who have not yet put in claims. There is $80,000 to pay out to creditors. "So it's not going to be a huge distribution - less than five cents to the dollar."

This amount could increase depending on the outcome of a possible voidable preference action. This action would involve the liquidators trying to get money back from a creditor who has been paid in full, and put it back into the pool. "We're in the process of getting a legal opinion, to see if it's likely to be upheld in the courts," says Waghorne. She says if successful it could increase the payout, but it would still be less than 10 cents to the dollar.

The assets from all three companies were pooled because they were closely linked together. Waghorne says all three operated from one bank account.

"The money all just got dumped into one bank account and when a bill had to be paid they wrote the cheque out from the one bank account, so it was a bit of a mess."

She says when the Number One Software Company went into liquidation, the bank account was frozen, because it looked like the accounts receivable belonged to it, when in fact, they belonged to the service company.

The man behind the Number One group of companies, Peter Macaulay, agrees with Waghorne that the assets of all three companies had to be pooled because they were so closely tied together.

"We had to consolidate them and put one solid thing into liquidation so creditors could be settled out of a single pool. Only one of the companies needed to [go into liquidation], but we had to put the others in so we could move the assets over to it."

The call centre business of the Number One Service Company was sold early last year to Infolink. However, there were still some assets belonging to the service company, which Infolink did not take on, and it was these which were put into liquidation.

Macaulay is blaming the liquidation largely on legal battles one of the three companies, The Number One Software Company, had with Novell and AT&T.

Macaulay, who runs a separate consultancy called the Number One IT Group, says the disputes with Novell and AT&T were settled on a confidential basis out of court.

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