Menu
Administrator: TodayTech could have been trading while insolvent

Administrator: TodayTech could have been trading while insolvent

Creditors' report shows significant revenue decline and ongoing net losses

A creditors’ report into TodayTech’s collapse has highlighted significant revenue decline, insolvency concerns and possible preferential payments.

According to the administrator’s valuation in the creditors’ report, sighted by ARN, TodayTech’s total unsecured creditors debt stands at $4.5 million. Its sole secured creditor, NAB, is owed $800,808 from a debtor finance facility as well as a leased equipment shortfall. Employee entitlements tally to $490,762.

Total assets are worth $1.61m, in contrast to a book value of $6.5m, leaving a shortfall of $4.18m.

Administrator, Rob Whitton of William Buck Chartered Accountants, was appointed on October 7, three months after TodayTech was dropped by key supplier, Intel. The company, which has ceased trading, is expected to be liquidated.

Whitton said preliminary enquiries suggested TodayTech was trading while insolvent. Revenue in the year to June 30, 2009, totalled just over $57m, bringing in a pre-tax profit of $5.4m but a net loss of $751,993. For the period ended October 6, when administrators were brought in, the distributor made $5.1m in revenue but was trading with a net loss of just over $1m.

This contrasted with annual revenues of $92m in 2008 and $98m in 2007 and net losses of $482,266 and $57,000, respectively.

“The profit and loss statements highlight that income has decreased significantly in 2009,” the administrator wrote. “The company has had a significant net asset deficiency for the last year of trading which is an indicator of insolvency. This is attributable to the sharp rise in non-current liabilities during the 2009 financial year.”

The administrator also hinted at unfair preferential payments over the past couple of years, which would need to be investigated further should the company be put into liquidation.

“I have identified a number of payments to creditors that may be preferential in nature. These payments are in excess of $11 million. Furthermore, it appears the company made payments to related parties in the two years prior to my appointment,” he stated.

“However, it should be noted that significant further investigations would be required to confirm these payments were in fact preferential in nature, in particular it would need to be proven that the recipients were aware the company was insolvent or likely to become insolvent and that the payments were not received in good faith. Should I be appointed Liquidator, I will conduct further investigations into the possible preference payments and seek to recover same if it is deemed commercial.”

A second creditors’ meeting is slated for November 11. After the first creditor’s meeting, Whitton told ARN unsecured creditors were likely to receive $0.20 of every dollar owed by the company.


Follow Us

Join the newsletter!

Error: Please check your email address.

Tags TodayTechWilliam Buck Chartered Accountants

Show Comments