Melbourne-based software firm SCentral, formerly owned by IT millionaire Peter Mavridis, has been placed in liquidation with debts of more than $10 million, less than four months after the company sold its assets to rival IT provider Brennan.
The formal move to appoint liquidators comes after a painful period for angry SCentral staff, who will now finally access unpaid entitlements through the Government’s GEERs scheme.
But that is unlikely to cool the anger of a group of staff who set up a website to criticise Mavridis, who was valued at $62 million on last year’s BRW Rich 200
Brennan chief executive Dave Stevens is hoping the liquidation also puts a full stop to the SCentral matter. While Brennan is performing strongly and is now considering a float to fund further expansion, Brennan has become somewhat tangled up in the firm’s messy demise.
Stevens first announced on November 2 that Brennan had acquired SCentral for an undisclosed sum and would take over the firm’s clients and staff. But Brennan didn’t actually acquire the entire company, instead doing a deal to buy the SCentral’s assets and client base.
Just three weeks later, on November 20, National Australia Bank appointed receivers from Deloitte to the SCentral shell. This sparked a wave of concerns among SCentral staff, who feared unpaid entitlements would be lost if the company was shut down.
But despite Mavridis telling IT industry website CRN that all entitlements would be paid, it appears most staff are still waiting. And they are not happy, as highlighted by the fact that some disgruntled staff have set up a website called “Chase Mavridis”.
However, the company’s move into liquidation on February 23 will mean former staff will be able to access entitlements through the Federal Government’s GEERS scheme.
Stevens, who paid out some commissions and bonuses owed to SCentral staff (these payments are not covered by GEERS) says the appointment of liquidators is the final milestone in the winding up of SCentral and is a relief for the 48 former SCentral staff employed by Brennan.
While Stevens denies the deal has been messy, he has been surprised by the level of angst among some former staff.
“We were surprised by the level of passion that the staff had around entitlements and around Peter, but we always knew that the outstanding entitlements would be an issue.”
“Overall it hasn’t been a messy integration and we were surprised at how smoothly it has gone.”
“The sentiment that came to the fore for the most part from former staff was that they were incredibly relieved to get some stability, and a regular pay check and an employer that had a real future.”
He says around 50% of SCentral’s former customers have been retained and although some clients involved in projects at the time of the company’s collapse have taken their business elsewhere, SCentral’s managed services and hosted clients have stayed with Brennan.
Brennan announced yesterday that the company’s revenue from new business jumped 86% to $15 million in the fourth quarter of 2009, excluding the impact of the SCentral deal.
Stevens says the company has actually done well during the downturn as companies “look to save money by using Brennan’s infrastructure-as-service model.”
“The big imperative over the last 18 months has been preservation of capital. They realised what a poor use of capital buying severs and running those boxes really is.”
The company says more acquisitions and a possible float is now on the agenda, although Stevens cautions that a float remains only an option at this stage.
“Honestly, we are a growing business and we are becoming a capital intensive business. It [a float] is an option if we need to raise capital.”
Tech website ARN has reported Mavridis has joined recruitment firm Chandler Recruitment. He was not available for comment prior to publication.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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