Author: Mark Fletcher

A meeting of creditors of Technology Business International Pty Ltd (TBI) was held on July 17, 2008 at the offices of Chartered Accountants Rogers Reidy in Queen Street Melbourne. TBI is the company with which newsagents signed for the lease of equipment needed to run Bill Express.

At the time of preparation of the notice of the creditors meeting the company had five creditors, the largest being HSBC Bank Australia Limited which was owed $3.4 million. This was secured debt. Mobius Financial was listed as a secured creditor with $1 in advised debt. Charters Paper and Dueltek were listed as being owed $72,473 and $907 respectively. The final creditor was Embedeed Technologies showing as being owed $47,755. Embedded Technologies operated from the Bill Express office in Eaglemont.

On the ASIC Summary of Affairs of a Company From 509, Sandro DiDonato, Director, declared that TBI had assets of $240,829 of which $225,629 was cash at bank and $15,200 was sundry debtors. This is extraordinary for a business which signed leases a few years earlier with 3,500 newsagents for amounts of between $26,000 and $32,000 per newsagency.

Newsagents were not notified about the meeting because they were not considered creditors by the liquidator. The liquidator’s representative with whom we spoke said that “TBI had no case to answer to newsagents”. I am sure that newsagents facing months and even years of paying the TBI lease on worthless equipment would have a different view.

One can only hope that ASIC and other authorities will invest sufficient resources to uncover what really went on with TBI, Bill Express, OnQ, ETT and all o the other businesses connected with this mess.

Go to my blog post from June 28 for more information on the TBI group. That post includes this information:

• TBI is owned by Technology Business Holdings Pty Ltd (TBH) and has two Directors, one of whom is Sandro DiDonato.
• Technology Business Systems Pty Ltd (TBS) is owned by TBH and has one Director, Sandro DiDonato.
• TBH has four shareholders, the largest (96.5% of issued capital) being Equip Rentals Pty Ltd and one Director, Sandro DiDonato.
• Equip Rentals Pty Ltd was deregistered on 9 December, 2007. It had one shareholder, Sandro DiDonato and two directors, one of whom was Sandro DiDonato.

TBH and TBS remain registered with ASIC today.

Some newsagents continue to face significant difficulties in trying to establish a new ADSL connection to their business in the wake of the collapse of the Broadband connection provided through the recently collapsed Bill Express.  There are reports of ISPs refusing to establish a new ADSL connection without the permission of the previous providor.  While some newsagents have been successful in jumping this hurdle, some have not, leaving their businesses without broadband access for the moment.

This is just another impact of the collapse of Bill Express on small businesses which can ill afford the business disruption.

The loss of the Bill Express network is being talked about in Apple circles.  A report at Apple Source documents consumer frustration at not being able to get iTunes gift cards from the usual retailers.  The report is not good news for Coles, Myer, Target and JB Hi-Fi.

Meanwhile, Woolworths are making the most of their good fortune over Coles and advertising on radio that they have mobile phone recharge including Optus and Vodafone.

Newsagents have received intimidating correspondence from Mobius Financial Services Pty Limited today outlining what Mobius considers is their obligation in relation to the rental agreements around the Bill Express equipment.

The correspondence demonstrates how completely newsagents were been conned by Bill Express, those who promoted the Bill Express offer to newsagents and those on whom newsagents relied to undertake due diligence on their behalf.

While Bill Express Directors are shareholders are walking away from debts of $250 million and probably more, newsagents are set to be chased for years to pay off equipment which is useless.

How ironic?  Big business walks away and small business is left to pay millions for equipment it cannot use.  No wonder newsagents are angry.

Newsagents were presented a single package of documents when they signed up for Bill Express.  We were told that we had to sign all of these to get Bill Express in our businesses.  While the fine print might have revealed that one agreement was with Technology Business International (TBI) and another with Bill Express and that there was no relationship between the two or no common ownership structure, mopst of us trusted the representations of Bill Express, their agents and the ANF, all of whom promoted and recommended we proceed.

TBI sold the book debt to Mobius earlier this year and called in the liquidators two weeks ago.  Only then did newsagents see how much they were conned.

While Mobius will say they bought the book debt fair and square and that they are not party to the Bill Express problems, such a position is, I would hope, open to challenge.

Connect East is the new toll road in Melbourne which opened a couple of weeks ago.  On June 30, Bill Express announced that it’s merchants can accept Connect East account top ups.  We heard at the Bill Express Creditors meeting on Friday that it appears the company was trading while insolvent well before this announcement was sent out.  Bill Express collapsed just over a week later.

Our Forest Hill and Frankston newsagencies are well positioned to sell Connect East product.  Unfortunately it is an opportunity we cannot act on.  I approached Connect East two weeks ago and they advised that they will not review their top up situation for six months.  I wish they would review this sooner.

Some newsagents have expressed their concern to the ANF about the contact the organisation reported last week as having had with Mobius Financial Services Pty Limited over the Bill Express related equipment lease a arrangements.

The ANF did not seek approval from newsagents prior to making contact with Mobius.    The concerned newsagents want the ANF to cease such contact as it does not act on their behalf and has not sought their advice on this matter.

The key focus now of newsagents in the wash up of the collapse of Bill Express is the status of the Bill Express related equipment rental.  Some newsagents have as much as four years of $495 (+GST) a month to pay.  Many newsagents entered into these lease agreements with technology Business International on the recommendation and endorsement of the ANF.

Mobius, an Allco company, bought the lease book from Technology Business.  I have put some questions to the liquidator of Technology Business to see whether visibility can be gained around the agreement with Mobius.

Tower Systems today received calls from several newsagents saying their Bill express supplied broadband had shutdown. A publisher confirmed they had received twenty such calls from newsagents. The Tower support team is able to assist to ensure that magazine invoices and other business critical files are accessed for Monday.

It would appear that the operational pain newsagents will suffer as a result from the collapse is far from over.

Cuscal issued revised information for BOPO customers yesterday. They also issued a media release following the Bill Express creditors meeting saying that deposits were safe. If I heard correctly at the Bill Express creditors meeting yesterday, one account holding BOPO customer funds is currently frozen. The Administrator undertook to look into this.

The Queensland Newsagents’ Federation today issued a special bulletin to QLD newsagents advising that BOPO card holders should withdraw funds by August 15. The QNF bulletin included a helpful sign to be placed on the window. I know from my own shops that BOPO customers have many questions and are coming to newsagents with these.

Mark Hawthorne and Jesse Hogan of The Age continue their excellent coverage on Bill Express in the newspaper today with a report on yesterday’s creditors meeting.  This story has a way to go yet.

The Bill Express (and related entities) creditors meeting today was fascinating.  In barely an hour plenty was covered:

• The total indebtedness of Bill Express is $209 million.  This may increase by at least $35 million if a claim by CCH is found to be correct.
• Bill Express had 9 employees.  Can you believe that?  The rest of their employees were employed through the Technology Business.  While we knew this, I was surprised that only 9 were employed by Bill Express.
• All the equipment used to run the business including systems holding the company accounts are controlled by Technology Business.  This makes the Administrator’s job almost impossible.
• There is no cash to continue the administration. They are hoping for a Tax Office GST refund or monies to be unlocked from elsewhere so that formal administration can move forward.
• There is a serious question about whether the company was trading while insolvent. This must tb the focus of work being done within ASIC at the moment.   I’d suggest that forensic research would show this to be the case as far back as February this year, maybe before.
• There was an interesting question from a representative of Cuscal about the account holding BOPO customer’s funds being frozen.  The administrator undertook to research this and see what can be done about releasing access to the account.
• Peter McDougall asked the most interesting question on the day – was there consideration to seizing the passports of Directors!
• A committee of creditors was formed.  This is made up of Optus, Vodafone, Telstra, Cuscall, Hutchinson Telecom, ANZ, Peter MacDougall, Capital Finance, ANZ, Don MacAskill from the ANF and myself.  This committee will consider the next steps including offers from parties for parts of the business.

Talking to people after the meeting, the common question is how could such a business collapse.  It was a no-brainer.  Sure the margins on rehcarge are tight.  But manage your cash well and you will be okay.  Cash is where most of the questions about Bill Express lie.  Questionable transactions.  Money flowing overseas?  Paying for assets not registered to the company.  Taking on debt for other entites.

No wonder Bill Express’ suppliers, respected names like Optus, Vodafone and Telstra shake their heads at how what should have been a sound business crashed to a burning heap owing hundreds of millions.

The next week will probably see administrators appointed to OnQ.  Maybe ETT too, the public company 43% owned by Bill Express.  If I am right, this will be three public companies in ruin.  The question then will be where were the regulators in all this?

I am grateful to the 77 newsagents who appointed me their proxy for the meeting.  I received another 10 proxies but the form used was the ANF pre-completd proxy form so I gave these to Don MacAskill of the ANF prior to the meeting.  I received another 17 proxies too late for the meeting.