Former director and shareholder of TLC IT Group Jan Chapman is in a dispute with his brother and managing director of the company, Alan Chapman, over the management of the reseller before and after it went into liquidation this week.
The pair, who had worked together since Jan Chapman joined his brother's company in 2003, accuse each other of improper behaviour. Another former TLC IT Group director and creditor, Craig Boyle, who recently launched an IT services business with Jan Chapman, is involved in the dispute.
Jan Chapman and Boyle each held a 20 percent share in the TLC IT Group, but both resigned last October They claimed Alan Chapman refused to share the company's financial details with them.
"We discovered towards the end of last year that the business was in real financial trouble, again, struggling to make even payroll," Jan Chapman told CRN.
They offered a plan to "rescue the business with a cash injection" that would "level out of the shareholders".
The proposal meant that Alan Chapman's 60 percent claim on the company would have been diluted and spread evenly between the three parties. As part of the proposal the pair asked Alan Chapman to step down as managing director.
"[Alan] just refused to speak to us, and refused to give us any information," said Jan Chapman. "So I resigned. I can't be a director of a company that's in severe financial difficulty and not know what is going on."
Countering his brother's claim, Alan Chapman said the pair had access to all the company's financials, at all times.
"They're company directors; if I did that and they still worked there [then] they'd be negligent as company directors," he said.
In 2006, Boyle bought into the company and claimed he was offered a 20 percent share of the business for an amount Jan Chapman claimed was in excess of $100,000. Jan Chapman was also offered a 20 percent share for $100,000 he loaned the business in 2008.
Jan Chapman said that he "still has that loan outstanding". He told CRN that Boyle had a loan outstanding, but would not reveal the amount.
He also claimed that his brother had refused to pay him leave entitlements.
"I went to the Fair Work Ombudsman to get my leave entitlement paid. I got most of it, but not all of it," he said.
Alan Chapman was unavailable to comment on whether any loans were outstanding at the time time this story was published.
Read on for the $100 valuation and the $20 payout....
The $20 payout
Last week Jan Chapman and Craig Boyle claimed to have received a $20 cheque from Alan Chapman for the 20 percent share they each had held in the company whilst working there.
"Last week we noticed all our shares from TLC IT Group had been transferred out to another company - Big Bog - which [Alan Chapman] owns. We had a letter through last Friday saying the business is worth zero dollars - and here's a cheque for $20," Jan Chapman told CRN.
A TLC IT Group shareholders agreement dated April 21 2006 - established when Jan Chapman and Boyle bought into the company - stated that only executive shareholders were entitled to company shares while employed by the company.
Alan Chapman's interpretation was that considering the directors had resigned, they were obligated to sell their shares.
CRN has seen a copy of a 'notice of compulsory acquisition of shares' letter and a copy of the alleged cheque sent to Jan Chapman.
"He's taken it all, cancelled it all," Jan Chapman said.
Alan Chapman said Big Bog is a holding company which purchased the shares in accordance with a shareholders agreement.
"When Jan [Chapman] and Craig [Boyle], resigned from the business their shares were compulsory purchased, according to the letter of the shareholders agreement, according to the letter of the law," he said.
Read on for the $100 valuation....
The $100 valuation
In March of this year, Alan Chapman had TLC IT Group, TLC IT Managed Services, TLC IP Networks and TLC Data Security valued by Whelan & Cook. The valuation - which took into account the company's assets and debts as at 31 October 2009 - was dated March 18, 2010.
An extract from the document stated: "We note that this valuation is contrary to paragraph 12.3 of the shareholders agreement dated 21 April 2006, which requires the valuation to be prepared on a going concern basis."
Boyle claimed the notification of the evaluation "was done in contrary to the shareholders agreements".
"It wasn't even done correctly, and all the companies were all listed as non-viable with ongoing concerns," he said.
But Alan Chapman said the valuation was an "independent agreement, valued on the books".
He said the books were "carrying a lot of debt" because the company was "carrying a lot of investment at the time".
"We [had just] spent hundreds and thousands of dollars on software," said Alan Chapman.
Alan Chapman also claimed that the company's financial position had deteriorated from mid-2009.
"We had a lot of companies go bust on us and take us for a lot of money," he said. "We had five go so that was very unpleasant. We had our finances stop with the bank, a lot of companies did.
"I was not at all in the slightest bit surprised with the valuation," he said.
He said revenue at TLC Data Security revenue has disappeared since July, but declined to elaborate.
ASIC documents seen by CRN revealed that TLC Data Security is currently in the process of winding up. On March 25, 2010, distributor Avnet Pacific filed a NSW Supreme Court order over debts owed by TLC Data Security.
Alan Chapman said his brother and Craig Boyle "left at the absolute worst time they could have left".
"The company is valued at the time they left", said Jan Chapman. "They owned 20 percent of the business each, so that's why they get $20 each.
But Jan Chapman disputed the assessment.
"By the end of October 2009, we had more of recurring revenue from clients," he said.
Craig Boyle said that TLC IT Managed Services was in the BRW Fast 100 list, and IP Networks was a "complete viable concern."
Jan Chapman also questioned why the company was valued as of October, 2009, as it did not represent the value of the business on the day the shares were sold.
Alan Chapman said he was disappointed at how far the relationship between he and his business partners had deteriorated.
"Jan's my brother, he's got a big chip on his shoulder against me," he said. "It really is a family feud going on here."