Calyx creditors wait with bated breath

Opinion

Calyx creditors wait with bated breath

Calyx new owners Better Capital have spent the last few days talking to customers and creditors as the ink dries on the deal they penned at the end of last week to bring the networking integrator out of administration.

At such a time, customers obviously want reassurance about the future of their supplier, and indeed Calyx is now in much better financial health, clearing the balance sheet of some £100m worth of debt and progressing with a stronger backer.

However, conversations with creditors, to whom Calyx owed circa £6m, are likely to be a little more intense. Better Capital bought the business from the receivers and in doing so did not assume the debts of the previous owners.
 
This has left many creditors feeling very nervous that the monies owned will not be paid, and networking and storage vendor Brocade, which maintained a direct relationship with Calyx, is probably wishing it had adopted a two tier model to provide a buffer via distribution.

Nick Saunders, head of portfolio at Better Capital, who starting working with Chairman John Moulton when he headed up VC Alchemy Partners, told Reseller Radar that it was in the process of sorting out the situation.

"We've not acquired the old business, we acquired the assets and so the new business does not carry those liabilities. But we are keen to develop relationships with our suppliers and are talking to those on a case by case basis.

"No vanilla answer applies to everyone," he added, "there are some creditors that are nervous, but as well as reassuring customers, you have to talk to suppliers in this process."

The management structure should be clearer by next week and if Calyx can smooth the way with key suppliers, it has an opportunity to turnaround the loss making operation; carving off undesired parts starting with the IT services business in Ireland.

It is likely that industry watchers will be able to draw some parallels with software firm Cedar, a business Moulton bought while at Alchemy - he sliced and diced the operation in the turnaround phase and when it was sold, the core business was a quarter of the size of the operate he bought.

This was first published in September 2010

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