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Administrator may be forced to give up

Administrator may be forced to give up

It appears as though the battle with Z-Tek is over for Andrew Dunner and Associates. For the past few months Dunner and a group related to Z-Tek have been suing and counter-suing in the Federal Court of Victoria. Dunner attempted to sue the Z-Tek directors, accusing them of breaching their fiduciary duties. The directors had counter-sued, accusing him of selling seized stock.

Dunner believes he would need to fund a public examination of the directors, accountants and related parties to Z-Tek in the Federal Court to get any result for creditors, who have to date received no return. But without support from creditors, or indemnification from his insurers, and a price tag of $50,000 to $100,000 for such proceedings, Dunner is unlikely to be able to meet this objective.

The administrator has been advised by his solicitors not to pursue the matter since there is very little documentation to support further legal action against the directors of Z-Tek Computer Pty Ltd. Further action could result in his own practice being billed for any adverse costs.

"I am just a practitioner trying to do something with my hands behind my back," he said. "The barrister says I have gone further than I should, and that going any further is just putting my neck in a noose.

"I would love to ask them about the stock, but there is no stock records. I would love to ask them about cash, but all I have are invoices, no ledgers. A substantial sum of money was made from cash sales and was never banked."

Dunner said that support from authorities, creditors and other parties is dwindling because they are uncertain that he has much of a chance to win a case when their opponents "choose where and when they understand and speak English".

The reaction

What Dunner can rely upon is the support of the IT channel. ARN has received numerous complaints from the reseller community, baffled that individuals imprisoned for corporate offences can once again be the driving force of a multimillion-dollar, expanding business.

Within hours of Dunner's settlement with Z-Tek, Ian Butterworth, the secretariat of the Association of Computer Dealers in South Australia, called a crisis meeting of committee members to discuss the ramifications for the market.

"The association is very conscious of what is going on," said Butterworth. "We are aware that there is a cross-pollination of directors between Z-Tek Computer Pty Ltd and all of the phoenix businesses that have risen."

Butterworth describes the whole Z-Tek saga as "an incestuous mess", with directors moving to and fro between several companies. All he can do at present is brief the committee and recommend that members place pressure on the Australian Securities and Investment Commission (ASIC) to make further investigations.

"We need to take a leading role to protect the interests of our members," he said. "But we are all in a volatile position - it is difficult to know how to proceed."

Meanwhile, Dunner has called a meeting to update the unfortunate creditors of Z-Tek Pty Ltd on the situation. He will also file his last report with the ASIC, a report termed the "533", which lists all the offences and breaches of duty attributable to Z-Tek directors and principals.

Dunner urges the reseller community to protect their own interests by making their own complaints to ASIC. "I'm told the commission has the scope to assist people who want to provide further information to ASIC," he said.

He is also upset that vendors continue to supply the various phoenix operations with stock.

But while Z-Tek has won the first round, Dunner does not expect to give up on his creditors completely. "I'm prepared to have a crack at anything," he said.


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