About 180 staff at Omega Technology are without jobs after the business closed its doors on Monday.
According to ASIC documents, Andrew Yeo and Geff Rambaldi from Pitcher Partners were appointed as administrators for the Melbourne-based hardware distributor and PC assembler on December 19.
Yeo said he had chosen to halt trading because Omega was unprofitable.
"We have to be careful not to trade where ongoing trading would create losses and deteriorate the assets for creditors," he said.
An Omega staff member, who was told he had lost his job last night, claimed only a couple of employees from its 180-strong team nationally remained on hand to oversee the business during the administration process. No staff had been paid over the past two weeks, he said.
"This happened very quickly yesterday [Monday] afternoon," he said. "We were told to collect our belongings and leave the premises. As this happened all the locks on the building were changed."
The former employee blamed the company's closure on a string of bad management decisions.
"With the merger [with Hallmark] there was no organisation at all," he said. "The company owed a lot of money to creditors and just got itself into further debt. The merger was the final straw."
The decision to close Omega's doors follows reports earlier this month that at least three major distributors, including Ingram Micro and Bluechip Infotech, had put a credit hold on the distributor amid fears that it was in financial difficulty. As previously stated in ARN, these two companies alone are allegedly owed hundreds of thousands of dollars.
Omega's troubles were brought to the fore after the Australian Taxation Office (ATO) lodged a wind-up petition against Omega in the Federal Court in November. The ATO launched the action after Omega failed to comply with a statutory demand. The case was originally heard in the Victorian Federal Court on December 5, and had been re-listed for January 23.
Yeo said Omega had 150-200 creditors, not including staff. He was hesitant to put a specific figure on its debts, but hinted that its outstanding bills exceeded $1 million.
However, the former company employee claimed supplier bills had run up to as much as $5 million.
"For the last month we were on credit stop with all of our suppliers," he said.
Omega has subsidiary sales offices in Sydney, Perth, Adelaide, Darwin, Hobart and Brisbane. The company started in 1985 as Omega Computer Industries, offering a range of IT hardware products including servers, components and peripherals.
In March, Omega merged with national PC assembler, Hallmark Computer International. Financial terms were not disclosed. Hallmark's flagship brands, Viewmaster and Portiva, were both retained.
The first creditor's meeting will be held at Pitcher Partners' offices in Melbourne on Friday. A second meeting is slated for mid-January.
Yeo said that while it was too early to tell whether the business could be sold in its entirety, he planned to advertise the business for sale. The company's Hallmark subsidiary in Northern Territory could potentially continue to trade separately under former owner, Edwin Ho, the former employee claimed.