UPDATED: S Central, Brennan negotiate debt collection

S Central and Brennan IT are locked in talks to decide who will chase S Central’s outstanding debtors. The task is crucial in paying out its creditors and remaining staff entitlements.

S Central’s business asset sale to Brennan last week originally left debtor collection to the S Central company shell. But during discussions with ARN yesterday, managing director, Peter Mavridis, said the company was now negotiating with Brennan to take on that responsibility.

Collecting remaining debts is one of two ways to cover S Central’s staff entitlements, many of which remain unpaid today. The alternative is to liquidate the company shell and apply for payment under the Government’s GEERS employee scheme.

“It makes more sense for Brennan to collect that [debt] as they have the ongoing relationships with customers,” Mavridis said. “The debts are more than enough to pay staff entitlements.”

He was hopeful of achieving an outcome in the next week.

As part of the asset sale, Brennan assumed responsibility for covering long service leave and commissions for those employees joining its organisation. Brennan IT managing director, Dave Stephens, estimated around 50 S Central staff had accepted roles.

In the meantime, liquidators were appointed to S Central’s distribution subsidiary, Infotronics, on November 10.

Infotronics stopped taking customer orders last week. It is understood Infotronics was on credit hold with several key suppliers.

“The reason we decided to appoint liquidators was that Infotronics wasn’t part of the business Brennan wanted to take on,” Mavridis said. “We could either wind it down, or liquidate it, which is the quickest way to collect debts, pay out staff and so on. We didn’t feel there was that much business in it.

“With any distribution business around a couple of million, it is difficult to make money out of it, as the margins and scale aren’t there.”

But former Intronics general manager, Phil Lancaster, was adamant the business made well over $4m in the last year and was the second most profitable part of the overall business outside Queensland. He claimed that in September, Infotronics had its second-highest sales month and gross margin figure based on invoices.

He also claimed there were six full-time staff at Infotronics when S Central was sold to Brennan.

"The staff that were there did an amazing job of trying to maintain the highest levels of customer service they could under the challenging situation," Lancaster said. He also congratulated Brennan on its professionalism and assistance to staff.

Also in question is Mavridis’ future role with Brennan. He again confirmed to ARN his intentions of joining Brennan to assist with the transition and business operations, but remains with the S Central shell until the entity is wound up.

“Eventually, the entity won’t be required – it takes a while to collect debtors, so it’s not a short-term thing,” he said. “We have seven entities we don’t need.”

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