Elite offers settlement to creditors
- 20 April, 2004 07:30
Troubled computer assembler, Elite Industries Group (ELG), placed in administration in late March, has sent out an offer of a deed of company arrangement in an attempt to provide some kind of return for creditors.
Elite Industries Group was the computer manufacturing arm of Elite Technologies, a company that produces digital video monitoring security solutions.
ELG was placed into administration after claiming that high failure rates among the Fujitsu hard drives it used in its machines had created costs that could not be contained.
Hugh Wily of Armstrong, Wily and Company was named administrator.
Wily and Elite Industries director, Edmond Yuen, have come up with a plan to maximise the return for creditors, according to Andrew Wily, a partner in Armstrong, Wily and Co.
He said that placing the company in liquidation would be unlikely to yield strong returns for the company as it was harder to collect from debtors.
A deed of company arrangement on the other hand, could give the administrator time to collect assets. It also allowed Yuen the option of diluting his claim as a creditor in order to maintain goodwill among other creditors, many of whom might still be business partners.
Andrew Wily said Yuen had put his personal money into Elite Industries in an attempt to keep it afloat just prior to its collapse, making him one of the company’s largest creditors.
“Mr Yuen, by far the largest creditor, has reduced his claim by some 50 per cent to improve the return for other creditors,” Wily said.
He rejected claims by a former Elite Industries staff member that Elite Industries Group and Elite Technology Group were essentially the same company.
The former staff member told ARN that many security products and computer products were sold in tandem to the same customers, and that from an operational point of view the two companies were one and the same.
Wily said the investigations of the administrator had cleared Elite and its directors of any wrongdoing, and that Yu’s attempts to pay employee entitlements in full and maximise creditor returns was indicative of his stature in the industry.
“Elite Industries effectively had a problem with Fujitsu,” Wily said. “Their costs skyrocketed. In my opinion, the director did the correct thing under the Corporations Act. There have been no dramas and there is no real animosity on the part of creditors towards Mr Yuen.”
For more on this story, see this week's issue of ARN.