Mwave owed $18M to creditors

Administrators from dVT Group for online IT retailer Esel, trading as Mwave, have outlined the company’s financial and operational position, with secured and unsecured creditors owed $18 million.

During the initial creditor’s meeting on 25 June, concerns were raised about Mwave’s sale to digiDirect, one day before administrators from the dVT Group were appointed on 13 June. 

The creditor’s report revealed the reseller owed a total of $18 million to secured and unsecured creditors, including Ingram Micro (owed $1.629 million), Dicker Data (owed $3.397 million), Synnex Australia ($2.7 million), and Leader Computers ($3.67 million). 

The creditor’s report also disclosed what digiDirect purchased from Mwave, including plant, equipment, and staff, some of whom were owed superannuation. 

Employees had raised concerns about unpaid wages, accrued leave (including annual and long service leave), redundancy entitlements, and superannuation. The administrator said these claims were being reviewed for validity. 

The digiDirect Group undertook accrued employee entitlements such as wages, annual leave, and long service leave of more than $1 million, and has continued to employ all Mwave’s employees. 

The digiDirect Group was in the process of notifying all customers that they have acquired the Mwave business and believe that they will improve on it and ensure its long-term continuity.  

While there were advantages to the digiDirect Group taking over the business, these included honouring outstanding vouchers, credit notes, and gift cards.

The digiDirect Group agreed to buy stock to fulfil orders and assist with the recovery of $900,000 from Esel’s PayPal account. 

Esel’s records indicate there was $3.9 million in stock in its Lidcombe warehouse.  

Administrators said most of the company’s stock was tied up under claims by secured creditors. Any leftover stock not covered by those claims would be sold to help repay unsecured creditors.