Black-owned IT company Choice Technologies, which was placed under liquidation last year, will no longer be bailed out by ConvergeNet.
However, liquidator Deon Botha, from Corporate Liquidators, says there is another interested party, and he will meet with the party tomorrow to determine if they still wish to put in a scheme. If not, the liquidation will go ahead.
Botha says the other party had been keen on bailing out Choice, but had been piped to the post by ConvergeNet.
ConvergeNet CEO Pieter Bouwer says the company has decided to not go ahead with a scheme of arrangements that would have benefited creditors. He says it would "not be useful" to provide the reasons behind not going ahead with the deal.
The scheme of arrangements would have seen ConvergeNet pay off the liquidators, then settle a portion of creditors` claims by collecting the debtors` book, contributing a capital sum and realising some of the company`s assets, according to a report by IT-Online.
The liquidation order was obtained against Choice by JSE-listed Square One Solutions Group, which last October filed a provisional liquidation order against the company, through subsidiary Structured Infrastructure Solutions (SiS), for money allegedly owed to it.
Should a scheme of arrangements be implemented, creditors - collectively owed about R100 million - would at least receive some money, and staff would keep their jobs. However, should the matter proceed to liquidation, staff would be without work and creditors would be more out of pocket, says Botha.
Deal dispute
It is understood that the dispute between the two companies arose from an attempt by Square One to take over a 49% stake in Choice, held by the National Empowerment Fund, as well as the remainder of the interest, held by the Choice Group. The initial deal was discussed in April/May last year, and received board approval from Choice.
ITWeb previously reported that the Choice liquidation order, according to sources close to the company, is based on a disputed R2.8 million, which Square One claims is owed to it by Choice.
CEO Semela Tseka said, at the time, that Square One had purchased 100% of SiS - a company that was often subcontracted by Choice to do cabling for customers. "Square One Solutions then used SiS to put in a claim against Choice for work done on our behalf and monies which they claim were owed to them. The monies they claim are owed to them are in dispute by us, as the work by them was not completed."
No scheme
Choice`s creditors are believed to be owed about R100 million and the ConvergeNet scheme would have seen secure creditors being paid out, staff retaining jobs, the South African Revenue Service receive R5 million out of R15 million owing, and other creditors 4c in a rand.
ConvergeNet was to continue with Choice`s operations and contracts, backdated from the date of the original liquidation. If the arrangement had been agreed to, a receiver would have been appointed to make final payments to creditors.
In a memorandum to creditors, ConvergeNet Holdings urged them to consider the arrangement, as it would allow non-secured creditors to receive some dividend, as opposed to none if the liquidation were to go ahead.
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