Hardware squeeze pushes Remora over the edge

One distributor has been left with a debt of more than $200,000 after Melbourne reseller Remora Technologies called in the administrators.

The systems integration company was tipped over the edge by a significant debt to the tax office, with the owner blaming the market acceleration away from buying hardware and toward cloud and managed services.

Remora, which was founded in 2001, filed for voluntary administration on 21 August and was then placed into liquidation after the second creditors meeting on 19 September.

Security and networking distie DNA Connect is the largest trade creditor of the failed firm, with a $236,000 debt, understood to be for Splunk licences.

DNA managing director Munsoor Khan told CRN: "Yes, we are one of the creditors but we run a tight ship and have well-established policies in place to manage these situations. It's an unfortunate situation for all concerned but we have credit insurance so this will not have a material effect on our business."

Other major creditors include the Australian Taxation Office, owed $449,000, Bibby Financial Service, owed $98,000 and Argentum Superannuation Fund, owed $52,000.

Remora chief executive Robert Silver said he was "devastated".

He told CRN it was "a disappointing outcome after more than 13 years of hard work in a business I was very passionate about".

"The impact of cloud services and managed services on a traditional systems integration reseller like Remora has moved much faster than expected. Combine this with a significant decline in customer capex spending, ongoing project deferrals, and a long and costly directors dispute, the financial impact became too much and the difficult decision has to be made."

Silver also took a swipe at one of Remora's suppliers. "Another contributing factor in my opinion was the lack of support from our key hardware vendor who consistently transacts directly with customers and has not effectively embraced their partner community to drive their growth and success. I know other partners continue to feel this pain."

Tim Heesh from liquidator TPH Insolvency told CRN that the likelihood of any return to creditors was "nil".

Before calling in the administrators, another of Silver's companies, Rivium, acquired some of Remora's assets – largely contracts and work in progress. Rivium, which was registered with ASIC on 5 May 2013,  has also hired many of the failed company's employees.

Heesh said TPH had investigated whether this was "an inappropriate transaction", but said that it was ultimately the best outcome for those workers who had kept a job. In an administration scenario, the workforce are priority creditors.

"When a transaction takes place prior to our appointment in both a voluntary administration and liquidation, our role is to work out whether the transaction can be defended by the parties who entered into it. We look at the rationale, and if he [Silver] hadn't done it, what would have been the outcome. The outcome would have been no better," said Heesh.

As well as listing itself as a "Splunk powered partner", Rivium's website bills Amazon Web Services and Oracle as vendors.

Remora's website has been taken down, but a cached version lists vendors Oracle, Splunk, Arista Networks, Violin Memory and CommVault.

Silver said Rivium had "a significantly different (not similar) business focus to that of Remora".

CRN has also spoken to the partner at the centre of that "long and costly directors dispute", James Cave, who said he was pushed out of the company in August 2013, despite being a co-founder.

He told CRN that getting fired from the company he helped establish with four weeks' notice was "absolutely horrendous", adding that it was "10 years of my life wasted".

Cave was critical of Remora's collapse and the transaction with Rivium. "They are flat out phoenixing," he said.

"I don't want him to walk away with the strength of reputation that Remora had – which I built. He doesn't deserve that anymore," Cave added.

When asked about Cave's departure, Silver said: "To clarify the removal of James as a director, this was a matter for shareholders, and he was removed as a director at a general meeting. In my opinion, there were good reasons for his removal which are best kept in the private domain. Subsequently he was made redundant as chief technologist by management in conjunction with cost-cutting exercises within the business," said Silver.