Touchbase Australia collapse due to poor management, excessive costs

Touchbase Australia collapse due to poor management, excessive costs

Administrator documents reveal management didn't pay enough attention to the actual financial position of the business and the easy supply of cash from the parent company, leading to a lack of focus

Excessive costs and poor management triggered the demise of Touchbase Australia, according to administrator documents.

Touchbase Australia entered liquidation three months after appointing administrators. On August 11 it appointed Riad Tayeh and David Solomons of De Vries Tayeh, as administrators. Touchbase Australia was recently renamed Emodite, which appointed liquidators on October 12.

Emodite managing director, Magnus Maynard, registered Touchbase Asia Pacific on July 12.

The administrator’s documents reveal the company owed in excess of $15 million to 108 unsecured creditors, which also includes employees. Included on the list are Westcon Group, which is owed $869,415; Verint Systems - $383, 676; Australian Taxation Office - $369,298; Office of State Revenue - $203,395; Telstra and Telstra Business Systems - $175,000; Integrated Research - $78,531 and Avnet Technology Solutions - $68, 486.

ARN contacted Magnus Maynard for comment, but he would not disclose details on Touchbase Australia’s demise.

In the administrator's documents, it said the reason for the company’s demise was due to its inability to reach breakeven after the change to the provisioning of Cisco products. Former directors, Riordan Maynard and Jeffery Maynard, resigned on August 10.

“They have pointed to poor management and excessive costs as being the reason that breakeven was never reached,” the document said. “The business was able to pay its debts as and when they fell through the support provided by its parent company. Although sales and market share have been significant it was not enough to ensure profitability.”

The document also said management did not pay enough attention to the actual financial position of the business and the easy supply of cash from the parent company had further exacerbated this lack of focus.

It also revealed that administrators had been in discussions with potential purchasers of the subsidiary owned by Emodite, but it had not yet achieved an outcome and a price that would have seen an appropriate return to creditors.

“Further investigations into this process can be completed during the liquidation process,” it stated.

Prior to the commencement of the voluntary administration process, the company sold its business to wholly owned subsidiary, Touchbase Asia Pacific.

Maynard said Touchbase Asia Pacific has its own client base.

“Touchbase Asia Pacific does have the people to perform the services required for clients,” Maynard said.

In June 2006, Touchbase parted company with its main vendor partner, Avaya, over a contractual dispute.

It was the first integrator to achieve Master Unified Communications status in Australia.

In January 2008, the company disclosed it rapid expansion plans across the country.

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Tags Telstratouchbaseavnet technology solutionswestconEmodite


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