Buyout turns sour as ispONE pair in court

The former boss of internet service provider ispONE, Zac Swindells, has taken his business partner and ispONE's new owners to court over an alleged breach of contract.

In the latest chapter to Conec2's controversial 2013 acquisition of ispONE, Swindells this month accused Conec2 owner, Cameron Adams, of trying to edge him out of the jointly-run operations the pair negotiated just prior to the sale.

The embattled ispONE went into administration in August 2013 following high-profile legal battles over unpaid bills and contract disputes with former wholesale partner, Telstra, and former client, Kogan Mobile.

The ISP’s administrators later approved the sale of the company’s profitable assets to Melbourne-based telecommunications provider Conec2 Group – specifically its then-new subsidiary AsiaPac Communications – for $1.7 million.

Conec2 purchased ispONE’s 29 employees and 61,000 customers, as well as its iBoss billing platform and retail brands including One Telecom.

But court documents filed in the Victorian Supreme Court earlier this month reveal Swindells has accused Adams of breaching a deal signed by the pair prior to ispONE’s administration, in which they agreed to form AsiaPac Communications solely for the purchase of ispONE. 

Swindells and Adams were each to receive a 50 percent shareholding in the new entity, which is registered to a Hong Kong-based company owned and operated by Adams, Conec2 Hong Kong. Swindells’ shares were to be held in trust by Conec2 Hong Kong until late January. 

But Swindells has now claimed Adams breached the agreement earlier this year when he cut Swindells and two former ispONE employees off from the bank accounts of iBoss and One Telecom, and moved $200,000 into an account only Adams could access.

He said Adams had also acted against the agreement by appointing directors to iBoss, One Telecom and AsiaPac without Swindells’ consent, and had similarly failed to transfer Swindells’ 50 percent shareholding in AsiaPac out of the Conec2 Hong Kong trust as agreed. 

Swindells claimed he and Adams had agreed in January to appoint one director – approved by them both – to each AsiaPac, iBoss and One Telecom; that Adams and Swindells would be joint signatories to the three businesses’ bank accounts; and that one David Ashmore would be the company secretary for the three.

But several months later, Swindells alleged, Adams appointed himself the director to the three businesses and another Conec2 employee, Malik Jainudeen, as their company secretary, which Swindells claimed he only discovered after doing a company search on the businesses.

The court last week upheld Swindells’ requests that Adams be restrained from acting as a director in AsiaPac, iBoss or One Telecom, or from seeking to exercise any powers in that capacity, until the case is heard.

The six defendants – namely Adams, his former partner Soraya Jainudeen, as well as AsiaPac, iBoss, One Telecom and Conec2 HK – were also ordered to refrain from transacting in the businesses unless Swindells agreed in writing.

He also requested, but was not granted, that Conec2 HK be required to transfer his 50 percent of AsiaPac shares, and that his costs be paid by the defendants.

Swindells’ formal application was adjourned last week and will be heard this morning.

Counsel for Swindells, Anthony Watson of K&L Gates, said in an affadavit Swindells was “concerned” that the affairs of the three business will be managed contrary to the terms of the agreement as a result of Adams' actions.

He said the removal of Swindells’ access rights to the iBoss and One Telecom bank accounts meant Swindells had no ability to pay the businesses’ creditors or staff, which could result in employees leaving and creditors taking action.

“He is concerned that the iBoss and One Telecom bank accounts will be stripped of monies and paid to interests associated with Adams,” Watson said in the document.

“He is very concerned Adams’ actions will puts the three companies in breach of their obligations – Medion specifically has an agreement with AsiaPac that if certain events occur it can gain certain rights to the iBoss billing platform that it currently licenses.”

Neither Swindells nor Adams responded to request for comment by the time of publication.