Liquidators take over CPS Technology

Communications-focused reseller CPS Technology Group has gone into liquidation, with more light shed on the problems leading up to the Melbourne company's collapse.

Nick Combis and Gavin Moss from accounting firm Vincents – who were first appointed as administrators then as liquidators – told creditors last month that, even after liquidation, unsecured creditors may not receive any money.

Negotiations to form a deed of company arrangement (DOCA) with creditors, which would have kept the company trading, failed because the deed would not have delivered enough of a return to creditors. A DOCA would also have forfeited the ability for former employees to claim unpaid entitlements under the Fair Entitlement Guarantee scheme.

Melbourne-based CPSTG owes more than $5 million to a variety of companies and people, including $2.3 million to Interactive Intelligence and more than $320,000 to NEC Australia.

The Deputy Commissioner of Taxation brought a wind-up case to the Supreme Court of NSW on 16 September, but that application was dismissed and Combis and Moss were appointed liquidators on 17 September.

Documents surrounding the corporate failure have revealed some of the problems in the lead-up to the insolvency.

CPSTG's chief financial officer said the company failed due to "protracted problems" in its work for Essential Energy in regional NSW, and a "former unqualified bookkeeper" not providing accurate financial information to management.

The administrators' report also revealed that a Director Penalty Notice was served against managing director Seamus Nash for unpaid tax "three to four months ago" and a former staffer undertook legal action in May to recover entitlements.

[Related: Former CPSTG employees tell their frustrations]

As previously reported by CRN, the assets of CPSTG were sold to its sole shareholder Call Processing Systems on 30 June, about six weeks before the appointment of the administrators. Combis and Moss found that the new entity assumed "substantial amounts" of some debts – including $1 million to one secured creditor – but left others behind with the now-dormant "old" CPSTG.

The CPS Technology Group brand continues to operate under the new ownership of Call Processing Systems.

Nash and general manager of finance and operations Mark Dick previously told CRN the new company offers distinct products compared with the old CPS.

"We're providing different suites of products and remodelled the business. We now have a managed services offering and introduced new products that weren’t in the old company," said Dick at the time.

The administrators said that the relationships and transfers of funds between a number of different registered entities of CPSTG – Call Processing Systems, New Era, Nashcom, Pascom and Commsonline – should be further investigated by a liquidator.

CPSTG also changed its business name to Coal Communications without the administrators' consent on 12 August, four days after their appointment. ASIC has been notified of this discrepancy and the administrators had requested the name change be reversed.

The wholly owned NSW arm of the business, New Era Communication Group, was placed under administration on 12 June. Major creditor NEC Australia applied for that company to be wound up – a request that was granted by the Supreme Court of Victoria in July. All staff from the NSW operations were terminated.

CRN has attempted to contact CPSTG director Seamus Nash for comment but has not received a response at the time of writing.