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Noose tightens on Z-Tek phoenix

Noose tightens on Z-Tek phoenix

Z-Tek Computers Pty Ltd could be hauled into court yet again as the appointed administrator attempts to gain control of the Z-Tek group of companies, and prevent the white-box assembler's phoenix-like rise.

Administrator Andrew Dunner, from Andrew Dunner & Associates, is composing legal documents that will endeavour to have the remaining five companies that are registered with Z-Tek Computer in their names face the same liquidation process as Z-Tek's head office in Melbourne.

Z-Tek had a controversial history in the channel before the Victorian Supreme Court threw it into liquidation in August for failing to pay debts in excess of $1 million to a Taiwanese manufacturer.

Days after the appointment of an administrator, Z-Tek Computer (NSW) circulated letters to customers and suppliers saying it had changed its Melbourne address and phone number but was continuing to trade.

Despite each branch office being registered under different ABNs and slightly different business names, Dunner has reason to believe the companies are operating in collusion through director relationships, shared administrative accounts and dealings.

Describing Z-Tek as a "phoenix operation", Dunner claims the companies are effectively negating the Supreme Court's decision to stop Z-Tek Computers Pty Ltd from operating, by re-emerging under a different ABN.

"The communication to the customer is misleading," Dunner said, claiming that customers and suppliers understood the various entities to be one and the same.

Dunner told ARN he is still "reconstructing" company records after computers that stored makeshift accounting spreadsheets were sold in the week leading up to Z-Tek being placed in liquidation.

Z-Tek directors have assured the administrator the company still has a "hard copy" of the financial information. However, these records have not been provided, said Dunner, with the hard drives of the computers being reformatted before the sale. Dunner has not ruled out the possibility of Z-Tek facing further legal action for fraud if the records do not surface.

Central to the administrator's concerns has been the company's stock and assets, which went missing just days before Z-Tek's liquidation. Dunner has reason to believe the stock was sold to an unnamed buyer for cash. The transaction was poorly documented and has further hampered Dunner's investigation.

"I'm still assessing how the assets were sold in the week prior to liquidation," he said.

In conjunction with the Australian Securities and Investments Commission (ASIC), Dunner sought a "search and seizure" warrant for Z-Tek's Melbourne, South Australian and NSW operations, as well as director Li Ping Huang's private residence.

The search impounded product and records, which are currently being reviewed.

Dunner said the investigation would take quite a while. It's not likely creditors will receive any return on the money they are owed unless the other Z-Tek offices are incorporated in the liquidation.

ARN was unable to contact Li Ping Huang but did manage to contact Z-Tek Computer (NSW) branch manager Edmund Wang. He claimed the companies act as separate entities and have only grouped together to receive a better buying price from suppliers.

Sources in contact with ARN at the time of liquidation suggested Z-Tek Computers Pty Ltd's stock ended up in the Z-Tek Computers (NSW) office. However, Wang denied any knowledge of Z-Tek Computers Pty Ltd's operations and its sale of stock and assets.

An ASIC spokesperson would not comment on the current Z-Tek investigation but said the regulatory body has several powers at its discretion when dealing with so-called phoenix companies. Besides seeking civil action, ASIC can put an injunction on a company registered under a different name if it believes it is in fact the same entity as the company in receivership. In such a case, all stock would be held for the benefit of creditors.

Search and seizure warrants and criminal prosecution are also possible under ASIC's powers.

Known annual revenues of Z-Tek (supplied by administrator)2001: $50 million2000: $60 million1999: $72 million


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