News

Brandscreen staves off winding-up order amid claims $13m is on way from mystery Malaysian backer

A mystery Malaysian billionaire holds the key to the future of ad tech firm Brandscreen after the stricken company held off a winding-up order following months of financial uncertainty.

Brandscreen

Sydney’s Supreme Court yesterday adjourned a bid to liquidate BRZX, the parent company of Brandscreen, until October 18, as its owner and chief executive Robert Manning insisted a US$10m (A$13m) windfall from the cashed-up businessman was just days away.

The investment would allow the company to remain solvent, pay off debts, including money owed to staff, and to re-launch the company, he said.

Brandscreen, a demand-side platform which emerged from administration in early 2014 and was acquired by Manning early last year, is thought to owe between $2m and $3m.

The application to wind up the firm was lodged by job agency Professional Recruitment Australia (PRA), one of several Brandscreen creditors who, along with management and staff, have been waiting for funds to arrive for 12 months. A clampdown on overseas transfers by Chinese banks – where much of the investor’s wealth is sitting – has been blamed for the tortuous delay.

O’Neill Partners, acting for PRA, told the court the promise of “supposed” funding had been heard before, but no money has ever materialised.

“There were suggestions by the defendant that payment would be made in September. That hasn’t occurred, so this is a re-occurring theme that our client has heard over again,” solicitors acting for PRA told the court.

Manning, however, was granted a two week adjournment by court registrar Leonie Walton.

Robert Manning

Manning: “The company has no solvency issues”

It is understood that Manning and business associate Neil Anderson, have been banking on the arrival of the US$10m investment from the Malaysian investor since last year. Manning insisted he has documentation showing the funds will arrive this week after a money transfer appeared to finally have been given the green light.

According to Manning, the protracted nature of the transaction has been caused by banking officials in China clamping down on money transfers and freezing accounts.

He pointed to the collapse of the sale of actress Cate Blanchett’s home in Hunters Hill as the most high profile example of the tight restrictions.

“As soon as our investment is remitted to us we will be paying 100 cents in the dollar of all legal debts,” Manning told Mumbrella. “The investment we are expecting to receive this week is $10m US, which equates at the current exchange rate to around $13m, so the company has no solvency issues.

“The contracts are in place, letters of commitment and the explanations for the delays in the transfer of funds are available and have been provided to the Australian Tax Office who, together with the staff liabilities, superannuation liabilities and the tax liabilities, is the single largest creditor.

“It is out intention to honour all of that.”

Neil Anderson

Brandscreen COO Neil Anderson

But patience among some creditors and staff – some of whom were in court yesterday – has run dry.

One ex-employee said staff had been strung along for months with the promise that investment was coming.

“At the end of last year Robert confidently said we are getting the funds before Christmas, and there’s going to be big bonuses for everyone. But it didn’t happen,” the source said. “We were given heaps of empty promises that the investment was imminent, that it was just days away.

“We were told all kinds of rubbish so that we would stick around and not resign.”

As staff became increasingly anxious, questions mounted over the investment and the future of Brandscreen.

“At the end of February it was painfully obvious that is was not going happen, and that is when people started resigning, but most of us left around May and June,” one source said. “Even now we are getting weekly emails from Robert saying the money is on its way.

“None of us have been paid our salaries since February and the only way we believe we will get what we are owed is for the company to be wound up.”

Staff have received a percentage of their salaries in one-off payments in lieu of full wages.

Brandscreen’s cash reserves are understood to have run dry at the end of February, with salaries and suppliers left unpaid, and clients walking away.

But management’s confidence in the arrival of the funds has remained undimmed.

As recently as August, Brandscreen’s Facebook and Twitter accounts flagged an imminent return for the business – using the ill-advised phrase ‘Phoenix’ – and insisting the “future is bright”.

brandsceenwaitover

“The phoenix is set to rise,” the firm posted in mid-June. It followed with a post at the end of July proclaiming: “The past few months have been tough but the future is bright! Watch this space! Phoenix”.

‘Phoenixing’ is a technical term for liquidating a failing company and illegally creating a new entity in the same field to avoid paying creditors. There is no suggestion that is the intention of the company.

In late August Brandscreen also posted an image on its Facebook page, again spruiking a re-launch.

brandscreenkeepcalm

The court hearing is the latest twist in what has been a turbulent 36 months for Brandscreen.

The saga began in late 2013 when Seth Yates and Julian Tol, who founded the company in 2006, called in administrators after they were unable to secure bridging finance or find a buyer.

But Brandscreen emerged from administration in March 2014 after being acquired by US ad exchange firm Zenovia.

With Tol and Yates no longer with the company, former Adstream global digital head Robert Manning was appointed APAC vice president in August of that year.

Despite initially rebuilding the workforce, Zenovia announced plans at the beginning of 2015 to scale down Brandscreen, a strategy that prompted Manning and chief operating officer Neil Anderson to acquire the business, and take on some of the debt.

“Good things [are] happening at Brandscreen,” Manning said at the time. “It is now stronger than it has ever been.”

While the company continued trading, it struggled for profitability and was hampered by larger than anticipated legacy debts, leading Manning and Anderson to embark on a fund-raising mission in 2015 which saw them travel to Asia to secure overseas investment.

 

ADVERTISEMENT

Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella Asia newsletter now.

 

SUBSCRIBE

Sign up to our free daily update to get the latest in media and marketing