GDC sued over debt to business partner

Hamilton liquidator Indepth Forensic says action has Telecom’s backing

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LISTED TELECOMMUNICATIONS services firm GDC Communications is being sued for its involvement in the collapse of phonecard company International Communications 2000 (IC2000) – the key creditor of which is GDC’s main customer Telecom.

The bulk of GDC’s $54 million revenue is from the management of seven of Telecom’s 34 patch contracts. The company has also made much of its recent ASP (application service provider) reseller agreement with Telecom. Under this deal, Telecom has agreed to sell GDC’s rental virtual office services to businesses.

IC2000 liquidator Dennis Parsons, principal of Hamilton-based insolvency experts Indepth Forensic, said the legal action had Telecom’s backing.

He said despite repeated attempts, the dispute had not been resolved and the only option was taking it to court.

Telecom is owed all but $12,000 of IC2000′s $1.2m debt. Given the complexity of the case, however, Parsons is suing for only $580,000, though this was likely to increase, he said.

As well as GDC, the action also names as defendants former GDC managing director Paul Honnor, who did not stand for board re- election at last month’s annual meeting, former financial controller Hayden Butler and sales manager Francis Wynne.

Reluctant to comment on the case, Telecom spokesman Andrew Bristol said Telecom would prefer a negotiated settlement to court proceedings. He acknowledged GDC and Telecom had a “significant” business relationship. “However, we expect our bills to be paid,” he said.

Honnor’s replacement, former Microsoft NZ head Geoff Lawrie, said the court case did not affect GDC’s relationship with Telecom.

He denied Telecom was backing the liquidator’s action or that Honnor stepped down from the board because of the court case.

“We have a very, very constructive and mutually profitable relationship with Telecom. Telecom and GDC have a different view about some of the events that led up to this but we’re working through that.

“You can’t say it’s constructive for us but we’re approaching this at the most senior levels on a mature basis with a view to getting it resolved and behind us,” he said.

“But I certainly don’t believe it’s putting any parts of our business and our relationship with Telecom at risk.”

According to companies office records, IC2000 was established in March 2000 to sell pre-paid phonecards. GDC agreed to provide the new firm with an interactive voice recognition (IVR) platform which was designed to enable calls to be received, checked and routed to destination countries.

Telecom was the telecommunications supplier.

A year later, IC2000 and a related firm Talk ‘N Save were placed in liquidation after a petition from Telecom, which was by this time owed more than $2.5m by the two firms.

The management of IC2000 directors, former taxi driver Hassan Shiiq Ahmed and undischarged bankrupt Louis Hahipene, was severely criticised.

But Parsons said there was little point pursuing them because they didn’t have any money.

GDC and the individuals named in the action deny the claims.