The untold story of TMKG Limited (or “Matrix Knowledge,” as the company now calls itself)…
2009 through 2011, The Matrix Knowledge Group Limited (the original Matrix company which preceded TMKG Limited) ― under the leadership of
Jacque Mallender (chief executive and majority shareholder) and other directors (including
Usman Khan and
Andrew Beale) ― incurred losses totalling nearly £4m on revenue totalling under £15m across that same period. This means the average profit margin for the three year period ending with 2011 was roughly
negative 25%. By the end of 2011, the company had debts totalling well over £3m.
In March 2012, Mallender orchestrated a pre-packaged insolvency (a bankruptcy procedure also known as a “pre-pack sale”) which, by all accounts, provided the opportunity for her, Khan and Beale to substantially benefit financially at the full expense of creditors and minority shareholders. Consider the facts:
» In a secret pre-pack sale on 5 March 2012, Mallender sold all of the original company’s assets (to include contracts and all other potential sources of revenue) to a group that included herself, Khan, Beale and two other investors with whom Mallender had a relationship ―
RCapital and
Flight & Partners. Creditors and minority shareholders not only were not given an opportunity to bid on the assets but were not even made aware of the sale until after it had been finalized.
» Four shell companies were used by Mallender, RCapital and Flight & Partners to affect the purchase. Immediately after the purchase, the four companies changed their names to match the names of the original company and its subsidiaries. Simultaneously, Mallender, Khan and Beale transitioned to remunerated, executive level positions with the new company (“TMKG Limited”).
» The sale price for the original company’s assets, as set by Mallender, was only £400k, with only £250k of that in cash. However, three weeks after the pre-pack sale, the expected annual revenue and income for the new company were reported to be £5m and £1m respectively.
» Bundled with the assets in the pre-pack sale were £421k of debts owed to relatives of Mallender and Khan, Beale and one employee. These debts were transferred to the new company and will be paid.
» All debts to other creditors ― which totaled £3 million ― were left with the old insolvent company and were effectively wiped out as a result of the bankruptcy proceeding. These creditors included former trading partners and HMRC. These debts included unpaid salary and reimbursements owed to former employees.
» Duff & Phelps, with whom Mallender had a relationship going back to at least September 2010 and who Mallender appointed as the bankruptcy administrator on the same day as the pre-pack sale, earned over £370k for facilitating the transaction. The £400k proceeds of the pre-pack sale were just a little more than enough to pay Duff & Phelps for their role.
So Mallender, Khan and Beale ― who presided over the company’s long, steady collapse into bankruptcy ― along with RCapital, Flight & Partners and Duff & Phelps ― all gained substantially. They effectively walked off with the company’s assets and revenues, leaving the company’s creditors and minority shareholders to bear the cost of Mallender’s and the other directors’ abject failure.
Was what Mallender and the others did legal? That is for the authorities and courts to decide.
Was what Mallender and the others did ethical and fair? That is for you to decide.
