Supply Chain sunk by failed deal

By ADAM GIFFORD

A sharp decline in new sales of SAP software licences and failure by an Australian spinoff to meet a creditors' compromise agreement have sunk Auckland company Supply Chain Consulting.

The company was put into receivership on August 15 and a liquidator was appointed on September 13.

A report of a creditors' meeting filed in the Companies Office says the company was caught in the downturn in the New Zealand IT market in mid-1999. As businesses concentrated on Y2K, they stopped spending on operational systems.

Supply Chain was set up by industry veteran Lindsay Rewcastle as a specialist SAP implementer that would focus on companies under $200 million turnover. Initially it won significant business in New Zealand, in particular a multi-country roll out for electric fence manufacturer Gallagher. But the competitive bidding environment fostered among implementers by SAP ensured margins were tight.

The directors decided they should shift the focus across the Tasman, with the New Zealand business operating as a branch of Australia.

A separate company was set up, Supply Chain Consulting Pty.

"The company is confident that the Australian operation has real prospects of trading profitably to generate sufficient cash to make payments to the creditors," the creditors' meeting report said. It said that, apart from separate arrangements with the first debenture holder, the National Bank, and Inland Revenue, remaining creditors were asked to agree to a compromise in which they would get 50 cents in the dollar over two years. The money would come from payments made by the Australian company.

The first payment, amounting to 5c in the dollar, was made as planned in January, but the one due on March 30 failed to arrive.

Accountant Rowan Chapman, who supervised the compromise arrangement, said: "It didn't work because the Australians advised me in June they were not able to fund the payments."

The Australian directors had agreed to fund it on a "best endeavours" basis.

He said the matter was now in the hands of the receivers, Wellington firm McCallum Petterson.

Supply Chain Consulting Pty chief executive Tony Carr said his company "acted to the letter of our agreement. I think you'll find all the problems were as a consequence of the way the company was run prior to our involvement."

He said the Australian company was "running fine".

Mr Rewcastle and fellow director Peter Fletcher said they were unable to comment while the matter was in the hands of the receiver.

But Mr Fletcher said: "I believe we did all the right things as directors and we tried to do our best by our creditors."