When the news broke just over one week ago (IT-Online, 31 March ), that Eclipse Network had been placed under judicial management, the rumours immediately started flying about what had gone wrong.

Among the many stories doing the rounds was one that pinned the blame on distrbiutor Tarsus Technologies. The distributor and its holding company MB Technologies have issued a statement setting the record straight about their involvement with the events that have unfolded.
The statement reads as follows:
"During challenging times such as those that currently face Eclipse Networks (Pty) Ltd, its subsidiaries and related companies it is critical that all those affected including staff, customers, bankers, suppliers and providers of capital are informed about the facts.
"On 17 March 2010 Credit Guarantee Insurance Corporation (“CGIC”) withdrew industry cover on Eclipse due to notifications received from various Eclipse creditors of overdue accounts and pursuant to the letter issued by Richard Rix to all creditors on 26 February 2010. Consequently, MB Technologies and Tarsus Technologies in response to a request from the judicial manager had to make the tough decision to not increase its credit line to Eclipse any further unless an acceptable business plan was provided by the directors of Eclipse. After numerous meetings and various verbal agreements no plan was forthcoming that could allow a view of the viability of the business to be formed.
"The MB Technologies Group, through its subsidiary Tarsus Technologies, has been an extremely loyal supporter of Eclipse for the past 19 years and has extended significant credit lines to Eclipse over the period.
In 2008 Eclipse found itself in cash flow difficulties and required the support of its largest creditor being Tarsus, amongst others. At the request of Richard Rix further trade credit was provided by Tarsus Technologies subject to a comprehensive legal agreement that governed the manner in which Eclipse would be managed going forward, acceptable security being provided for the trade creditor funding and the cessation of further investment by Eclipse in noncore high risk ventures. These investments were depleting Eclipse’s cash flow and were placing the business’s funding requirements under pressure. Furthermore, these initiatives were being funded out of money that was effectively due to creditors.
"Richard Rix represented Eclipse and various Eclipse group companies in the negotiations for the then existing and the additional credit lines secured by the 2008 agreement, with his signature to these agreements evidencing his agreement with all terms, conditions and covenants.
"Despite a specific clause limiting the further investment in Eclipse Multiplay and any other new businesses, Richard Rix, Johan Schuurman and Ana Stark, as the directors of Eclipse, failed to comply with the terms of the agreement. The directors allowed unauthorised funding to be spent exceeding the agreed limit by almost five times and allowing additional funding to be invested, contrary to the agreement reached with MB Technologies and Tarsus Technologies. The full extent of Eclipse’s liabilities will be disclosed at a meeting of creditors to be held in due course.
"On 28 February 2010 Richard Rix sent a personally signed letter to all suppliers entitled “Account Status Update” in which he alleges that Eclipse’s inability to pay its creditors is due to a change in its bankers. He adds further that “Despite rumours you may have heard, I assure you that Eclipse is both profitable, healthy and continues to grow strongly despite the economic challenges most organisations are faced with. The fact is that we are bucking the trend”. He invited a meeting with creditors.
"Pursuant to this letter various meetings were held with Richard Rix and Nico Meintjes with both the MB Technologies CEO and Tarsus Technologies CEO and CFO present. The insolvency and consequently Eclipse’s inability to pay its debts was discussed. The dangers of trading under insolvent circumstances were highlighted to the Eclipse directors. In addition, discussions were held that sought to find a solution to the extremely weak financial position that Eclipse found itself in and to address the contraventions of the 2008 legal agreement. The serious breaches had placed Eclipse in a position where it was unable to pay its debts, including salaries, in the normal course of business.
"At the meeting, management accounts were presented which clearly indicated that both in the short and the long term Eclipse was commercially and technically insolvent and would urgently require significant funding from third parties to continue as a going concern.
"Despite negotiations that were held in good faith with Richard Rix during March 2010, that sought to find an acceptable way forward, Richard Rix applied for Eclipse to be placed under judicial management with the High Court granting such order on 19 March 2010 unbeknown to the creditors including MB Technologies / Tarsus Technologies.
"Subsequent to the appointment of the judicial manager, various meetings were held with CGIC, MB Technologies, Tarsus Technologies and Johan Schuurman the financial director of Eclipse to gain a full understanding of Eclipse’ financial position. Richard Rix was invited to these meetings on several occasions and despite agreeing to meet declined the meetings at the last minute.
"Once placed under judicial management by the High Court of South Africa the responsibility for the management of Eclipse was placed under the control of Henk Strydom and three other judicial managers. An independent third party consulting company that specialises in turn arounds was appointed by CGIC to evaluate the viability of Eclipse and its ability to continue as a going concern. The independent report revealed Eclipse’s dire financial position and indicated that its survival would be dependent on a large capital injection or continued support from its creditors.
"On 25 March 2010 the judicial manager relieved Mr Richard Rix and Mr Nico Meintjes of their respective positions as chief executive officer and national procurement officer and placed Johan Schuurman in the position of acting CEO because of his financial responsibilities and knowledge of the business.
"On 26 March 2010 a high level overview of the company was presented by the judicial management team to MB Technologies / Tarsus Technologies and CGIC calling for further credit to be extended by Tarsus Technologies. Various meetings were held to discuss the requested additional credit extension with MB Technologies / Tarsus Technologies being firmly of the view that unless an acceptable business plan was received no further credit would be forthcoming from MB Technologies / Tarsus Technologies.
"On 29 March 2010 the judicial manager requested MB Technologies / Tarsus Technologies to sanction further funding. MB Technologies and Tarsus Technologies are Eclipse’s largest creditor and could unfortunately not extend further credit particularly in light of the aforementioned breaches.
"MB Technologies has been working with the judicial manager to evaluate the various options available to both Eclipse and its creditors and will follow the appropriate channels to recover the amounts it is owed and assist where possible in securing alternatives. All creditors and interested parties are encouraged to follow the correct legal procedures and to contact Henk Strydom of Strydom and Bredenkamp Attorneys for further information."