SolNet creditors force change of liquidators

By ADAM GIFFORD

The liquidation of former Sun Microsystems agent SolNet has been put in the hands of Auckland insolvency specialists Ferrier Hodgson after creditors vetoed the directors' original choice.

The company, now known as S Resources, was put into voluntary liquidation after Sun cancelled its agency agreements and asked the High Court to wind it up.

Sun claimed it was owed about $7.5 million.

Before pulling the plug, SolNet directors sold assets to SolNet Solutions, which continues to service the same customers.

At a creditors meeting in Wellington last week, Sun teamed up with bankers Westpac, which claims to be owed more than $1 million, to sack original liquidators Grant Thornton.

Sun's lawyer, Richard Gordon, of Bell Gully, told the meeting there would inevitably be suspicion when a company sold its entire business to another company run by the same directors, and the involvement of Grant Thornton in that transaction created a conflict of interest.

Grant Thornton's first report to the Companies Office listed almost $17.5 million of assets, $16.5 million of which was owed by SolNet Holdings.

"We have been informed by management that it unlikely that the debt due from SolNet Holdings will be recoverable," the report said.

Just over $1 million was owed under a debenture to the McNae Family Trust.

SolNet Holdings director Murray McNae said it was normal inter-company debt, and there were unlikely to be sufficient assets in the holding company to satisfy that debt.

He said he was not sure why Sun was claiming $7.5 million.

"The debt owed to Sun was part of the normal operating relationship with Sun. None of the debt owed to Sun by SolNet Resources was outstanding; there had been no issues between Solnet and Sun. It is not as if it had been a longstanding dispute over moneys owed," McNae said.

"The reality is we had a very good first quarter, we sold several systems worth several million dollars and at the time Sun cancelled the contracts there were moneys outstanding between Solnet Resources and Sun."

He said the statement of affairs reflected the position at February 20, and the directors had reduced debt before that point as money became available.

"All that will be investigated in the liquidation process," McNae said.

"The company's affairs are very well ordered. We have provided substantial records to the liquidators.

"I am very comfortable with what directors have done throughout this affair and I am looking forward to the liquidator's report."

Sun Microsystems refused to comment.