The administrator appointed to managed IT services company Forum Group has sold the business to Sydney-based IT and voice service provider Our Kloud.
The sale will see 72 Forum Group staff join Our Kloud, ensuring employees can retain their entitlements to the tune of $1.6 million.
Mackay Goodwin commenced the sale process on 9 July, a day after it was appointed administrator to Forum Group, revealing it received 111 enquiries about the sale of the business, with 95 interested parties signing non-disclosure agreements (NDAs) as it investigated the viability of the group of companies.
The group's owner Bill Papas reportedly ‘disappeared’ to Greece following an investigation by Westpac into fraud allegations involving alleged forged customer invoices totalling more than $250 million into his other company Forum Finance.
Westpac and the Federal Court appointed Jason Ireland and Jason Preston of McGrathNicol as liquidators to Forum Finance on 9 July to investigate its assets and liabilities. Freezing orders were also obtained with Westpac now pursuing action to freeze Papas’ overseas assets as well. The freezing orders were also extended to Papas’ business associate Vincenzo Tesoriero.
Mackay Goodwin CEO Domenic Calabretta said the sale was a fantastic outcome for the employees and customers of Forum Group, despite facing obstacles in having no access to funds due to freezing orders at the time of its appointment, as well as facing numerous competing creditor claims against the business.
“We are pleased and relieved to have been able to preserve the business and ultimately sell under highly challenging circumstances,” he said.
Speaking about the new acquisition, Our Kloud owner and CEO Eric Constantinidis said the acquisition of Forum Group provided an opportunity to expand Our Kloud’s footprint in the Australian managed technology space.
Court documents reveal that Constantinidis and Bill Papas are cousins and have both been involved in amateur car racing in the Fanatec GT World Challenge Australia.
“I’m pleased that we’ve been able to bring on board over 70 Forum Group employees, adding their talent and expertise to our growing team. We’re looking forward to this next chapter in Our Kloud’s journey,” Constantinidis said.
At a creditor’s meeting on 21 July, Mackay Goodwin recommended McGrath Nicol as replacement administrator as the firm has been chosen by Westpac, which has the most significant exposure in the group.
The financial figures behind Papas’ fraud allegations have continued to grow as more lenders have come forward claiming to have been caught up in the Forum web, including Japanese bank Sumitomo Mitsui, which estimates its exposure to the tune $98.9 million and French bank Société Générale, which estimates $9 million.
Publicly-listed Thorn Group – which owns Radio Rentals, has also revealed to shareholders it was investigating its dealings following a potential exposure to Forum Group and Forum Finance to the tune of $2.2 million relating to equipment finance loans funded between 2013 to 2019.
In its most recent court appearance, Westpac claims more than 100 allegedly fraudulent transactions were uncovered in more than two years, shifting millions into entities and assets owned by Papas and Tesoriero.
The case continues before Justice Michael Lee in the Federal Court.