Founders of Melbourne Microsoft reseller nSynergy sued in battle over assets

Two directors of independent software vendor LiveTiles face a legal challenge after the brother of one of the founders alleged he was cheated out of his fair share as a co-owner of a Microsoft Sharepoint reseller they owned, nSynergy.

The NSW Supreme Court has given the go-ahead for the proceedings, which were brought by Keith Redenbach and another former nSynergy shareholder, Campbell Ray, against Karl Redenbach and Peter Nguyen-Brown, both co-founders and executive directors of LiveTiles.

The four men were shareholders in nSynergy, the Melbourne-based Sharepoint reseller that was acquired by Rhipe in 2014 for $25 million in stock and cash.

At the time, Rhipe also acquired a 12.5 percent stake in LiveTiles, which develops a user interface tool for creating tiled interfaces for Sharepoint and Azure implementations. Rhipe later sold most of its stake in LiveTiles.

LiveTiles went public on the Australian Securities Exchange through a reverse buyout in September 2015 with an initial market capitalisation of $57 million. Its market cap had risen to $203.5 million at time of writing.

Keith Redenbach and Ray accuse Karl Redenbach and Nguyen-Brown of diverting assets away from nSynergy to separate corporate entities, including LiveTiles and another firm, nSynergy International, which came under parent company Legal Practice Management Group (LPMG).

“The affairs of LPMG and nSynergy International have been and are being conducted by Karl Redenbach and Peter Nguyen-Brown in a manner that is oppressive, unfairly prejudicial or unfairly discriminatory to them and contrary to the interests of members as a whole,” the case’s statement of claim read.

“[They] have breached statutory and equitable duties owing to LPMG, nSynergy and nSynergy International and seek orders that they compensate those entities pursuant to section s1317H of the Corporations Act for breaches of statutory duties, and orders for equitable compensation or account of profits for the breaches of equitable duties.”

According to the statement of claim, LPMG was incorporated by Keith Redenbach and Karl Redenbach in 2002 with the assistance of Campbell Ray, then nSynergy was founded one year later. Peter Nguyen-Brown also joined that year.

Nguyen-Brown and the Redenbachs each held 31.67 percent of the company’s share capital each, while Ray held five percent.

Keith Redenbach resigned as director of the two companies in 2004. That same year, Karl Redenbach and Nguyen-Brown incorporated nSynergy International, and Keith Redenbach alleged that a US entity, nSynergy LLC, was incorporated in 2005.

He alleged that another entity – nSynergy OSC Holdings Pty Ltd, now part of Rhipe – was incorporated without his knowledge in 2013.

Keith Redenbach alleged his former co-directors had breached their directors duties by establishing separate businesses and diverting business opportunities and customers away from nSynergy.

He claimed these actions constituted oppression or conduct that was unfairly prejudicial or unfairly discriminatory to himself and Ray, and is contrary to the interests of members of nSynergy.

In response to CRN's enquiries, LiveTiles pointed to a statement it made to the ASX two weeks ago, indicating that the court proceedings relate to "a shareholder dispute in respect of an unrelated company, involving LiveTiles' CEO" and that the company "[had] not received any claims or demand and are not party to any proceedings".

Judge Black of the New South Wales Supreme Court has allowed proceedings to continue in a ruling on 27 April. The case was originally filed in June 2017.