The demise of Mac Supplies

As administrators try to salvage assets, questions raised over sale of Digital Tool Box Dearbail Jordan reports.

A couple of years ago, Apple reseller Callhaven collapsed into sale of Digital Tool Box Dearbail Jordan reports. administrative receivership after running up millions of pounds worth of debts.

The man who stepped in to acquire various assets of the company was Anthony John Moxon, chairman of Universal Computer Systems (UCS).

It is ironice then that Moxon's company suffered a similar fate earlier this month when it fell into administration (PC Dealer, 23 September).

The reasons as to why UCS - which trades as Mac Supplies and is estimated to be in debt to the tune of between #3.5 million and #4 million - ended up in this predicament after Grant Thornton and Pannell Kerr Forster were appointed joint administrators at the High Court on 17 September, are many.

According to industry sources, the reseller claimed the financial status of the company was hampered from October 1997 to September this year, as it expanded into the US and Ireland. Sources said the advance into the US cost the company #200,000, while it sustained a loss of #80,000 for the Irish move.

UCS also claimed that due to an accounting error for the period ended 30 September 1997, its financials were overstated by #150,000, with substantial losses sustained in the current trading period.

Joint administrator Finbar O'Connell, partner at Grant Thornton, argued that although the UCS balance sheet for 1997 revealed the company's debts to be #2.2 million, its assets far outstripped its liabilities.

But one industry source said he was astounded that a young company - UCS was established in November 1995 - was able to receive such high amounts of credit - some as much as #300,000.

Another source said UCS also claimed there had also been a loss of ability to fulfil orders efficiently due to a drain of capital, which pushed it into administration. Another reason for UCS' demise was the suggestion that the reseller had recently lost a percentage of its business after an order had been cancelled.

According to a number of industry sources, stocks at the Acton company were estimated to be somewhere in the region of #250,000 and #1.5 million.

In its 1997 financials, the reseller's stock level was #1.7 million.

James Samson, managing director of Computers Unlimited, said: 'The creditors went into UCS on 14 September to identify stock, but there was not much there.' One source added: 'UCS was ordering stock in August and at the beginning of this month. There was supposed to be about #250,000, but it totalled #25,000.'

The business is still able to operate, despite a substantial drop in stock, as a result of an interim agreement with Grant Thornton involving mail-order firm Multiple Zones. The company has expressed an interest in purchasing some of UCS' assets and is processing orders taken by UCS and then shipping them.

The sole reason for this arrangement, according to O'Connell, is to 'keep the company going'. But he admitted: 'This was an agreement that was entered into before the administration.'

Another agreement which was established prior to administrators being appointed was the sale of UCS division Digital Tool Box, which sells publishing software including extensions and plug-ins. It has long been regarded as the jewel in UCS' crown.

Digital Tool Box was set up in April 1997 and, according to its managing director Simon Mercer, Moxon owned a 75 per cent stake in the company.

Mercer said he wanted to break away from UCS to set up the business as a separate company and had approached Moxon about the proposal several months before the administration.

Mercer said as of the week beginning 14 September, the full assets and liabilities of Digital Tool Box were transferred to Mastertime Technology, a trading name that was purchased on 29 July. Mastertime Technology then became Digital Tool Box and took on all liabilities and existing customers.

But there is confusion over what this means for the sale of the company.

O'Connell said: 'A deal happened before our appointment, which we will assess.'

However, Noel Collins, managing director of Type Technologies - which trades as Camelot - claimed he had been approached by Grant Thornton about purchasing Digital Tool Box.

While the joint administrators try to salvage the wreck and ease the impact on the creditors, do Apple partners share the administrators' drive to save UCS assets?

Terry Martin, director of the Apple division at Ingram Micro, said: 'I don't think there is a necessity for Mac Supplies to exist and be part of the Apple market. There are many highly qualified partners in the area.'

Whatever the outcome, the Apple industry has proved it is strong enough overcome a reseller facing troubled times. But it must be praying that it's another two years before something like this happens again.