Bill Express

Click here to download a copy of the proof of debt form newsagent can complete to register as a creditor of OnQ. OnQ is the company which committed to paying a monthly rebate to newsagents. I have lodged a form for rebates not paid this year. Once you have completed the form, keep a copy and post the original to Worrells, GPO Box 1834, Melbourne 3000.

While there is no money in OnQ and therefore no apparent chance of getting the rebates repaid, newsagents shold still register as a creditor. I have claimed $1,050 for each of my newsagencies – rebates payable as per contract.

Based on ANF advice to newsagents, the organisation appears to be collectively bargaining on behalf of newsagents with Allco and Mobius in pursuit of a discounted settlement over newsagent’s Bill Express equipment rental agreement.

I cannot find authorisation from the ACCC on their Collective bargaining notifications register for the ANF to act on behalf of newsagents on this Mobius issue. Nor has the ANF sought permission from newsagents on this.

Newsagents may wish to email the ANF asking that they not represent them in discussions with Mobius and Allco. Emails could be sent to: reception@anf.net.au.

The ANF would be well advised to compare the number of newsagents registered with its legal strategy compared to those registered with the Class Action which was started by an independent group of NSW newsagents.  I expect that the numbers will show newsagents want the Bill Express equipment agreement challenged before there is any consideration given to negotiating a settlement.

The Banking Industry Ombudsman website has some helpful information for canceling a direct debit which may be useful to newsagents who have had payments deducted for Bill Express equipment this week even though they had cancelled the direct debit authority with their bank.

If you have given a third party an authority to debit your account, that authority may be cancelled either by notice to the third party and/or by notice to the bank. This is reflected in clause 19 of the New Code of Banking Practice, which says that a bank will promptly process your instruction to cancel a direct debit request and will not direct or suggest that you should first raise any such request directly with the third party. The bank may suggest that you also contact the party and this is a prudent course to take to ensure that the authority is cancelled.

Newsagents who cancelled their direct debit authority and had money taken our for the Bill Express equipment this week ought to make representations to their bank about how this is a breach of the Code of Banking Practice.

If your bank refuses to refund the money they allowed to be deducted after you cancelled the direct debit authority, you should advise them you will make a complaint to Financial Ombudsman Service.  Click here for details of how to register your dispute online.

Mark Hawthorne at The Age today continues excellent reporting on Bill Express and the collapse of OnQ.

We have spoken to the Administrators of OnQ and they have provided a formal proof of debt form. This will need to be completed and lodged with Worrells in advance of any creditors meeting. My view is that OnQ is indebted to my newsagencies for the rebates as documented in Schedule D of the Bill Express agreement.

While there is no money in OnQ, by registering as a creditor newsagents can at least have a voice at the table as the last rites are performed and therefore hopefully be better informed. I will publish an updated example of the form completed later today.

When a creditors meeting is announced I will publish details here along with a proxy form.

Meanwhile, a group of around 20 newsagents yesterday met with representatives of the ANF in Melbourne. Most of the meeting was taken up with Bill Express matters. The difference between the ANF approach and that of the team behind the NSW instituted Class Action was evident. The ANF approach is to negotiate a settlement of the Mobius debt newsagents have been saddled with. The NSW Class Action approach is to challenge the debt on the basis of legal precedent. As I blogged here last week there are precedents worth considering.

The major flaw in the approach the ANF is taking is that it accepts that the equipment rental agreement is separate to the Bill Express agreement. That acceptance leaves the ANF strategy pursuing an outcome which is unacceptable to newsagents. Unless the ANF changes its approach or communicates its reasoning in a more convincing way it will continue to lose members on this issue.

The ANF Directors needs to practically and publicly demonstrate that they will pursue the Mobius agreement issue until the very end and that they will put the needs of newsagents ahead of their own. If they are not prepared to do this they ought to resign. On the evidence so far this year, the Directors of the ANF have not put the needs of newsagents ahead of their own.

My understanding is that the majority of newsagents attending the meeting in Melbourne with the ANF yesterday signed up for the NSW Class Action and not the ANF strategy.

OnQ, the parent of the collapsed Bill Express company, has announced the appointment of administrators.  This move was only a matter of time given once Bill Express collapsed.

I am a creditor of OnQ as are most newsagents.  The Agreement I signed commits the company to paying rebates as outlined in Schedule D attached to the Agreement.  While the company will claim that it varied the Agreement, I’d like to hear how a judge views that.  In the meantime, I’ll register as a creditor.  If I get a form for this I will post it here.

I will be interested to see what happens now with ETT, a public company 43% owned by Bill Express.  If it collapses that will be three related  ASX listed companies collapsing.

On the weekend I checked my Bill Express and Mobius equipment agreements and noticed that the document version markings, in fine print on the lower left corner of each page, matched.  These common markings link the Bill Express and Mobius equipment finance agreements.

Much has been made about these agreements being separate.  The ANF in its communication to newsagents makes it clear they view the agreements as separate.  While I am no lawyer, I would have thought that a court would find it relevant to its considerations that agreements intended to be separate would have the same version markings.

The status of these agreements is of grave concern to newsagents across the country.  It concerns me that not enough is being done by the ANF to address this situation.

A Victorian newsagent wrote to his bank a week ago seeking a refund of the funds taken from his account by Mobius for the Bill Express equipment. His letter sought the refund on the basis that the direct debit authority he signed for the Bill Express equipment was in favor of Technology Business International. Yesterday morning, checking his account, the newsagent found that his bank had refunded payments it has deducted without his authority since March this year.

This is a tremendous outcome.  Good on the bank for realising that it did not have the right paperwork to allow such a withdrawal.

At Networked Knowledge Dr Robert N Moles publishes material about alleged serious miscarriages of justice.  In one post, Contract Law Lecture, Moles writes about contracts and reasons for termination.  In citing the case of Foley v. Classique Coaches Ltd, Moles writes:

A problem will arise if the machinery provided for in the contract breaks down for reasons over which the parties have no control. The traditional common law rule was that if the means for ascertaining the price failed, there could be no contract.

Newsagents entered in to a contract to finance equipment to operate the Bill Express and DialTime services, at the same time they entered into a separate contract for the provision of the Bill Express / DialTime services.
I am sure the legal experts representing newsagents are looking carefully at the status of the finance contracts given that the purpose of the machinery provided under the contracts contract has failed.

I have been contacted by several newsagents in the last 24 hours about the role of the ANF in promoting Bill Express to new newsagents at the ANF run newsagents training course. In each case they say the ANF participated with Bill Express employees in promoting Bill Express to new newsagents. This included talking up the rebates. I am told there was no mention that the rebates could be removed at any timer.

One newsagent told me that they explicitly asked the ANF representative if the ANF had checked Bill Express out. The answer was they had and that it was a good deal. The ANF staffer did not disclose that they worked for an organisation which made a commission from its endorsement of Bill Express.

Keeping its own arrangement secret meant that newsagents did not have all relevant facts when considering the advice on the ANF on Bill express.

Some associated with the ANF put it about that I am obsessed with the organisation. This is not the case. I am concerned that the ANF did not disclose its own commercial relationship with Bill Express each time it promoted Bill Express to newsagents.  I have put these and other issues to the organisation and it has not responded.

The QNF has sent information to its members yesterday about the communication newsagents have received from Mobius Financial Services Pty. Limited about the Bill Express equipment. Below is the information provided by the QNF.

As convenor of the NSW newsagent’s class action, NANA has received the following advice which we have forwarded on to Qld Newsagents:

1. You are NOT required to keep making payments to anyone in relation to the equipment rental.
2. The Mobius FAQ sheet is seriously misleading, deceptive and misstates the position.
3. The claims by Mobius FAQ and the letter that the equipment rental company has assigned its rights may or may not be correct, but it is impossible to tell from the documentation. What has been said raises more questions that it provides answers. The assignment claim should at this stage be regarded as irrelevant.
4. The current advice states that participants of the class action NOT make payments; if you wish to participate please contact us on (07) 3862 7100
5. As we have said previously, if any party attempts to bring recovery action against any of our participant newsagents, the group will bring proceedings to protect their position. We think it is very unlikely that this will be necessary. However, our solicitors are in regular contact with the receivers.

This advice contradicts advice provided by the ANF to newsagents late yesterday. Actually, the ANF did not provide advice, it called for expressions of interest in funding action around the equipment leases. Newsagents are angry that the ANF is asking for newsagents to fund action by the ANF given that the ANF earned in excess of $1 million in revenue in relation to the these agreements which are not set to be challenged. Newsagents I have spoken with would like the ANF to commit some of the $1 million plus it earned toward getting advice on this matter.

Page 2.2.1 of the Newsagent Manual published by the Australian Newsagents’ Federation and provided by the Association to new newsagents attending mandatory training is all about Bill Express. Here is some of what is in a manual provided by the ANF just over a year ago:

Bill EXPRESS is owned and managed by DialTime, an experienced technology company that forms part of the OnQ group of companies. DialTime is an expert in over-the-counter transaction systems and specializes in delivery of electronic pre-paid services to retailers.

The concept comes with a commercial package for newsagents and additional benefits available to Members of the Australian Newsagents’ Federation. Benefits to ANF members include:

• A new revenue source from bill payment.
• EFTPOS through ANZ at leading industry rates and zero debit card fee for any transaction volumes.
• Electronic pre-paid mobile phone and telecommunications product through DialTime.
• The option of a national advertising screen designed to increase sales.
• A comprehensive electronic retailing platform designed to evolve into the future.
• Additional financial benefits.

This ANF documentation further demonstrates the conflict of the industry association in representing newsagents and fulfilling their contractual obligations to Bill Express / DialTime.

Due diligence in civil litigation (also known as due care) is the effort made by an ordinarily prudent or reasonable party to avoid harm to another party. Failure to make this effort may be considered negligence.

This is from the Wikipedia entry on due diligence. When newsagents saw the wholehearted endorsement of the ANF of Bill Express in the cover story of National Newsagent, the national magazine for newsagents published by the ANF, they reasonably expected that due diligence had been done on the offer being recommended to them.

Not once in the seven pages devoted to Bill Express in the May 2003 issue of National Newsagent were the commercial terms between the ANF and Bill Express disclosed. Nor in the two pages about Bill Express in National Newsagent in the June, July and August issues.

Talking to newsagents today about the ANF promotion of Bill Express, many say they understood the Bill Express offer to have been thoroughly researched by the ANF on behalf of newsagents. They thought the ANF had checked the complete offer to ensure it would not be harmful for newsagents.

I doubt that appropriate due diligence was undertaken. I have certainly not found any evidence of due diligence beyond questions about the agreement between the ANF and Bill Express.

This question of due diligence is important if newsagents are to get to resolution of the expensive mess left by the collapse of Bill Express. We know from documentation in the pblic domain that newsagent exposure is somewhere between $15 million and $20 million. For small family run businesses to be left with such debt from an offer brokered and promoted by an industry association for their own profit is unprecedented.

The problems newsagents have with the Bill Express related contracts today would have been exposed by thorough due diligence in 2003. The ANF could have easily made their agreement on commercial terms with Bill, Express contingent upon an acceptable and fair legal framework being approved for newsagents. From what I understand this requirement was not put by the Newsagents’ Association.

This is why newsagents are angry at the role of the ANF in the matter of Bill Express.

In my post yesterday I listed Embedded Technologies as a creditor of Technology Business International. Embedded Technologies is another company associated with Sandro DiDonato or was on paper at least. It is now controlled by a Robert and Sharon Gallesio. It operates from the same address as other TBI and Bill Express related businesses.

Embedded Technologies is interesting because it may have played a role in supplying technology to TBI which was then leased to newsagents as part of the Bill Express package.

Not all newsagents had their marketing and other rebates stopped by Bill Express earlier this year. I have seen evidence of the company paying a rebate to a newsagent as recently as earlier this month.

Moody’s Investor Service has downgraded Mobius ELR-01 notes.  23% of the ELR-01 pool is made up of debt associated with Bill Express equipment in newsagencies. In the announcement about the downgrade, Moody’s said

The rating action follows the appointment of liquidators of Technology Business International Pty Limited (TBI) and the appointment of administrators to a related party, Bill Express Limited. TBI is one of the originators and primary services of the receivables securitised through the transaction. Moody’s also notes the further deterioration in the performance of the underlying receivables pool as well as the residual uncertainty surrounding the servicing transfer process currently taking place.

In particular, Moody’s notes the following:

– TBI was placed into liquidation on June 30, 2008 and Bill Express into administration on July 8, 2008. Bill Express is a provider of payment and transactional services to a large number of Australian newsagents. The services are available via equipment provided and leased to the newsagent obligors by TBI, with the underlying leases representing the Mobius ELR securitised pool attributable to TBI.

– The services previously provided to the obligors by Bill Express have been discontinued, rendering the computer equipment ineffective.

– While Moody’s believes the contractual arrangements to repay the equipment leases in full continue to be legally robust, there is a significant risk of non-payment or delay in payment by the underlying obligors. Any such action may result in both temporary payment shortfalls and permanent principal loss to the Mobius ELR-01 notes.

– The AUD 15.6 million TBI-associated portfolio currently represents approximately 23% of the Mobius ELR-01 pool. The rating action incorporated Moody’s views with regard to the likelihood and extent of any potential loss suffered by the transaction as the result in turn of the situation surrounding TBI and Bill Express.

So, we now know the amount of newsagent money involved – $15.6 million.  This figure, more than anything else I have published here, ought to attract attention from newsagent associations to fix such an expensive problem for newsagents.

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.