CMYKhub’s attempt to buy the business of failed Media Options may be thwarted, as the administrator says a rival offer from Bhaskar Datta’s sister-in-law’s Sureprint business ‘may give more back to the employees’.
If Sureprint does end up winning it will mean the Datta family will retake control of Media Options, which collapsed with $3.3m in debts last September.
Administrator David Iannuzzi from Veritas Advisory will call a meeting of creditors for mid-August, where he will present both bids, one from CMYKhub and the other from SurePrint – a company set up 19 days before Media Options collapsed and whose sole director Amrit Chandra is Bhaska Datta’s sister-in-law – to be considered by the creditors.
Iannuzzi says if the creditors resolve to accept the CMYKhub offer, Veritas will begin proceedings to evict Sureprint and Sydney Print Hub from facilities and order them to relinquish the assets and intellectual property.
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The two companies, both of which have Datta’s close family members as sole directors, have been effectively running the Media Options business under a $1000 a month licensing deal since last September.
Denholm says CMYKhub has the support of the creditors committee, but Iannuzzi says while the creditors committee prefers the CMYKhub offer, it ‘only represents a faction of the creditors’.
Denholm and CMYKhub paid a $50,000 deposit to buy the business back in February, but has since been thwarted in its attempts to make the sale go through. However Iannuzzi says the agreement had ‘a lot of conditions attached to it’ and was more about making sure Denholm was ‘fair dinkum’ by putting up some cash as a deposit.
Denholm says one of the conditions was that the administrator get all the assets of the business out of the hands of Sureprint and Sydney Print Hub.
Denholm says he is not surprised by the latest move by Veritas, coming after more than six months of delays since CMYKhub signed that purchase contract in which the liquidator committed to take legal action to recover the assets within 14 days.
Denholm says: “We have been taken aback by the events up to and prior to offering to purchase the business. From the very beginning there were challenges. Firstly the business was actually sold to Bhaskars sister in law just two days after Bhaskar, his accountant and Veratis met.”
“This was prior to the voluntary administration. The extent of this sale agreement was not disclosed at the creditors meeting despite three separate people questioning it. There was an extremely strong recommendation from the administrator for the creditors to accept a deed of company arrangement and let Bhaskar trade on.
“We had a lot of trouble getting answers to questions to allow us to put in our bid with delays of over two weeks in getting response to emails.
“Our bid was accepted by the creditor committee twice and despite receiving a commitment by the administrator to take action to recover the assets we have had nothing but delays.”
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During these delays both Sydney Print Hub and Sureprint have been allowed to operate the business under a controversial $1000 a month licence agreement, meant to protect the value of the business for the benefit of the creditors.
However Denholm says: “Far from protecting the goodwill it has allowed the customers of the Media Options group to be transferred to the new entities, to their websites and phone numbers. The Media Options value has been damaged and not used. IP from Media options has been used in the website of Sydney Print Hub.”
“In addition to this the building with the unencumbered assets has been leased by Sureprint and the now liquidator has told us that they can't gain access to the building. Throw in a Heidelberg press that has been transferred between the entities and you get a very messy situation.
“We have serious concerns about the process and how it has been handled.”
Iannuzzi says there has been some mediation with Sureprint but all legal action is on hold until after the meeting.
Iannuzzi defended his handling of the sale and denied he was favouring any side over the other, “I have remained independent from the get-go. Whatever is thrown at me, be it from Sureprint or a hungry buyer, I have to send it to the creditors,” he says.
“Both parties want the business and I’m trying to play umpire in the middle. I’m doing everything I can to keep all the stakeholders happy.”
Iannuzzi told ProPrint in February when the agreement with CMYKhub was signed that “the future income of the business from the new reputable owners is safer than under the current ones”.
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The administrator maintains there has been no sale of the Media Options business and the licencing agreement allows Sureprint and Sydney Print Hub to use the intellectual property and assets only until a full sale of the business is completed.
He says CMYKhub was also offered a licencing deal under the same terms but has not taken it up.
“I understand where Denholm is coming from, he wants to get this done and it is a top priority for him, but this has to be done right and like he says there have been some delaying tactics by Sureprint,” he says. “Things like this often take longer than all of us would like.”
Sureprint owner Amrit Chandra has not returned ProPrint phone calls, while Bhaskar Datta himself has claimed he is only a ‘consultant’ who ‘sometimes’ uses offices at Sureprint. Similarly Rahul Rajeev Datta, Bhaskar Datta’s son, who is sole director of Sydney Print Hub, offered a ‘no comment’ to ProPrint.
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