By Gareth Vaughan
More than 100 former ProvencoCadmus employees are to fight an Employment Relations Authority decision that gifts their NZ$1.6 million in preferential employee claims to ANZ in the wake of the sharemarket listed electronic payments provider's receivership.
Barrister Philip Skelton, representing the former ProvencoCadmus staff, confirmed to interest.co.nz that appeal papers have been lodged with the Employment Court and served. A hearing is not likely before April or May next year.
The appeal comes after Employment Relations Authority member Alastair Dumbleton last month ruled in favour of ProvencoCadmus' receivers, KordaMentha's Brendon Gibson and Michael Stiassny, effectively handing the NZ$1.6 million to ANZ. The bank, New Zealand's biggest, recently reported record annual net profit after tax of NZ$1.085 billion for the 12 months to September 30.
The NZ$1.6 million is comprised of wages, holiday pay and redundancy entitlements. Under the Receiverships Act and Companies Act employees are given preferential creditor status up to a specific amount each, which at the time of ProvencoCadmus' demise was NZ$16,420. KordaMentha has accepted that the amounts claimed are legitimate.
However, KordaMentha argues that before the receivership, the employees were employed solely by holding company ProvencoCadmus, whereas the staff themselves maintain they were employed by ProvencoCadmus and at least one of the subsidiary operating companies.
At the Employment Relations Authority hearing KordaMentha's lawyer Tim Clarke argued the staff were employed solely by ProvencoCadmus Limited, which as a holding company, had no inventory or accounts receivable from which preferential creditor claims can be paid. ProvencoCadmus' only major asset was shareholdings in subsidiary trading companies including Provenco Payments, Provenco Retail Automation, Cadmus Payment Solutions, and Provenco Technology.
Thus the Employment Relations Authority was tasked with determining the identify of the employer or employers. In his ruling, Dumbleton sided with KordaMentha in deciding ProvencoCadmus was the sole employer, leaving ANZ in line to pocket the NZ$1.6 million.
ANZ pulled the plug on ProvencoCadmus in August 2009, and tipped the company into receivership seeking to recover NZ$23.8 million, after ProvencoCadmus tried unsuccessfully to secure funding from its major shareholders Todd Capital and Navman founder Peter Maire. At the time of the receivership ProvencoCadmus chairman Rick Christie blamed an unsustainable debt burden, sluggish investment and product markets, and a weaker-than-expected trading performance for the demise. The ProvencoCadmus group was created through the May 2008 merger of Provenco and Cadmus who both had ANZ as their bank.
The latest receivers' report shows ANZ has recovered just NZ$8.85 million with NZ$14.95 million still outstanding and Gibson saying there'll be a "significant" shortfall.
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