A UK user has been left short of a £14m High Court award because a computer supplier is going into liquidation, writes Lindsay Clark.
Following a long-running legal dispute, the High Court awarded £14m to Pegler, a manufacturer of taps and valves, because of Wang UK's failure to deliver on an IT contract. But Pegler is unlikely to receive the full amount because Wang UK is going into voluntary liquidation as a result of the award.
In 1991 Pegler contracted Wang UK to supply a manufacturing planning and management system over two and a half years. From the start Pegler felt Wang was not meeting the terms of the contract. "The system was supposed to reduce stocking and help manage sales," said a spokesman for Tomkins, Pegler's holding company. "The business performed worse as a result of the new system, not better."
In 1995 Wang abandoned the contract. Two years ago Pegler bought a new system to meet its business needs. The £9m court award was designed to cover the purchase of the new system, the cost of trying to put the old system right, and loss of profit. In addition, £5m was awarded to cover interest and legal costs.
Pegler looks unlikely to recover all of these costs because Wang UK is being put into liquidation by its owner company Getronics, a spokesman for Pegler said.
However, Roger Whitehead, UK managing director of Getronics, said his company had done everything it could to protect Wang's creditors. Getronics put £9m aside for creditors before the liquidation of Wang UK, in anticipation of a settlement with Pegler of between £2m and £5m.
"We did not have any choice but to liquidate the company following the ruling," he said. "The judgement came in significantly above the £9m balance."
Whitehead said that Pegler had initially filed for £23m on a contract worth around £1.2m. He pointed out that Pegler was awarded less than 40% of the claim and that the creditors would receive more through a voluntary liquidation than a forced liquidation.