NZ system builder talks revival deals with creditors
- 01 October, 2003 17:12
New Zealand’s largest whitebox builder, PC Company, has decided against receivership or liquidation for the struggling PC assembler and instead launched a scheme of arrangement to save the company.
Managing director, Colin Brown, announced last week that the scheme of arrangement should give him more control over proceedings.
However, Wellington-based IT specialist lawyer, Michael Wigley, said such schemes could be quite difficult to manage and weren’t common.
He said a scheme of arrangement was governed by the Companies Act, which has a section devoted to “compromises with creditors”.
“As I understand it, and I’m not that familiar with this particular case, he’s repaid the bank loan and therefore taken over the debenture,” said Wigley.
This puts Brown in charge of the process rather than leaving it to the bank, which would typically appoint a receiver.
“Receivers would require an indemnity and can be expensive,” he said. “The alternative is liquidation, of course.”
Under Brown’s scheme, he would have to sit down with creditors and shareholders to discuss how much can be repaid and when.
“He might say to someone ‘you’re owed $1000, how about we pay you $500 over the next three months and call it quits’. That sort of thing,” Wigley said.
Wigley said those types of schemes could fall apart under the strain of trying to please all the creditors.
“They’re really not that common because of the difficulty,” he said.
PC Company users are still in the dark over who will be handling any warranty issues that arise. The PC Company was a founding member of the Computer Manufacturers’ Association (CMANZ), which has a fund to pay for warranty repairs should a member company be placed in liquidation. Association chairperson, Peter Shirley, said he had yet to speak to Brown and couldn’t comment.
The PC Company’s virtual ISP service, PC Connect, was also up in the air. However, Hamilton-based ISP, The Wave, was continuing to support PC Connect customers.
Brown was not available for comment at the time of going to press.