New documents show full extent of Esel’s damage post-Mwave sale

The company owes millions of dollars to disties and unpaid superannuation to Mwave employees.

Esel sold Mwave to DigiDirect Group, prior to the company going under, and one distributor requested new administrators during the first creditors meeting, according to new documents.

CRN Australia has obtained a copy of minutes of the meeting held by ASIC on June 25 that show the DigiDirect Group purchased the company for more than $1 million, taking on employee entitlements.

The administrators noted that some superannuation continues to remain outstanding to employees, but investigations are continuing at this stage.

The documents also show Dicker Data requested different administrators from Wexted Advisors.

Daniel Turk, who represented the distributor said he had concerns about the circumstances of the appointment of the current administrators given that Esel’s business and assets were sold a day prior to the appointment of the current administrators.

Creditors were invited to express views on whether alternate Administrators should be appointed.

One creditor called bringing in the new administrators a “monumental waste of money” and asked what the replacement firm would bring to the table that would be benefiting the creditors.

They held a vote to see if the current administrators should be replaced, seven voted for the change, 69 voted against and four abstained from voting.

The documents also confirm Esel owes several distributors a combined sum of $18 million, these distributors include Dicker Data, Ingram Micro, Leader, XIT, MMT, and TechData.

The documents show the exact figures each distributor is owed, Leader is owed $3.6 million, Dicker Data is owed $3.36 million, Ingram Micro is owed $1.6 million, MMT is owed more than $800,000 and Tech Data is owed over $500,000.

Concerns over sale

Distributors are still sceptical about the sale with one creditor asking why DigiDirect purchased the insolvent business.

Esel filed for voluntary administration late June and news promptly followed that they sold the reseller to the DigiDirect Group.

The documents show the chairperson said the director appointed the administrators after the sale of the business as Esel did not have sufficient assets to pay its liabilities.

However, the administrators said they will review the pre-administration sale of the business and assets as part of the Administrators’ investigations which will be reported to creditors in due course.

A DigiDirect spokesperson didn’t tell CRN Australia when they began discussions of DigiDirect Group acquiring Mwave but said they have held a “long-standing” interest in the business.

“Talks were held initially with Mwave's previous majority shareholders and more recently, with their founder and majority shareholder. Conversations progressed very recently and reached a final agreement,” they told CRN Australia.

Mwave is one of Australia’s biggest online tech retailer and has been running for more than 15 years. The reseller offers PCs, laptops, and components and peripherals.

CRN Australia has reached out to DVT Group for comment.

This story was continue to be updated as it unfolds.