Quadnet has sold its hardware business to Genisys Enterprises for a small sum but is considering a Company Voluntary Arrangement (CVA).
The London-based reseller has struggled to pay debts recently according to some suppliers, and is in detailed discussions with insolvency practitioner KSA Group about its financial position and restructuring.
Zabir Aleem, managing director of Quadnet, said cuts in credit insurance and vendors taking business direct shaped its decision to sell off the hardware business to Genisys Enterprises.
This represented 97% of Quadnet’s revenues he confirmed but was sold for just a nominal fee.
“We are becoming a more service oriented company,” Aleem told MicroScope.
As a result, five staff have transferred to the new owners and two others including marketing director Abdul Terry were made redundant at the end of last month.
He refused to confirm or deny potential plans to apply for a CVA but suppliers have received a letter from KSA stating that it was “assisting the directors to prepare their proposals which will include a company voluntary arrangement”.
The rationale behind a CVA, which will be sent to all creditors within 28 to 42 days, is to allow Quadnet to continue trading and agree to pay suppliers a percentage of the debt, rather than a zero return if the firm is liquidated.
However, sources cannot understand how Quadnet can now apply for a CVA when the firm “acknowledges” the majority of its business has already been sold.
In the year to 30 April 2008, Quadnet’s turnover was £6.9m and retained profit was £6,000. It had a net asset value of £264,000.