NZ police exercises $1 buyback of Wynyard software

Tuesday 14th March 2017

New Zealand Police has taken up a $1 buyback option for software it sold to failed developer Wynyard Group in 2012.

Assistant commissioner Jevon McSkimming said in an emailed statement that the law enforcement agency had "exercised our right to buy back the IP rights for EVE (Environment for Virtualised Evidence)". When Wynyard went bust five months ago NZ Police was undecided on whether or not to trigger the option.

The agency developed the software in 2007 to help police build a virtual copy of seized electronics such as computers and mobile phones, which can then be searched without compromising the original evidence. Police sold it to Wynyard in 2012, which the software developer characterised as commercialising the product for export markets. No price was disclosed, though NZ Police's 2013 annual report, which covered the period, showed the sale of intangible assets generating a $36,000 cash flow.

Wynyard appointed voluntary administrators last October when the board decided a $10 million loan from shareholder Skipton Building Society or raising new debt or equity wasn't in the best interests of the firm, its shareholders or other stakeholders. The administrators Neale Jackson and Grant Graham of KodaMentha generated just $2.8 million from the sale of assets before they were appointed liquidators last month.

The software developer's insolvency triggered the NZ Police's buyback right for the intellectual property and any developments on the product, though Wynyard stopped investing in the digital forensics market in 2016 after an operational review led to trimming back the business into two lines.

Police had two contracts with Wynyard at the time of its failure: a software licence, maintenance and hosting agreement, and IP transfer for the EVE. Between 2012 and 2016 Wynyard was paid $7.2 million by police, of which $3.4 million was in 2014, former Police Minister Judith Collins said in a response to a written parliamentary question.

Wynyard had won a contract to supply the Serious Fraud Office with its investigator product, however when faced with significant technical problems the white-collar crime investigator lost confidence in the company and its services, and terminated the three-year contract a year early.

The New Zealand Defence Force has been a smaller customer of Wynyard's with minister Gerry Brownlee saying the firm had been paid $47,455 by the military since 2008.

Korda Mentha's reports show Wynyard (NZ), the firm's local trading entity, had 108 priority creditors owed $2.1 million as at Feb. 8, and another 224 unsecured creditors owed $177.9 million who ultimately voted to liquidate the group of companies. Wynyard Group, the parent company, owed ASB Bank $75,000, and had $209,000 of cash on hand at the time of Jackson and Graham's appointment in October.

They valued Wynyard (NZ)'s total assets at $24.9 million, of which $15.9 million was attributed to software assets, and $6 million in related party receivables. Of the $179.9 million in total liabilities, some $171 million was owed to Wynyard Group, with $6.7 million to other unsecured creditors.

Among the creditors named in the reports was Callaghan Innovation, which provided about $830,000 in research and development grant funding to Wynyard. Of that, $681,000 was outstanding as at Jan. 11 under clawback provisions. NZ Police was also named as a creditor of the group.

Wynyard was spun out of Christchurch's Jade Software in early 2013 to free the intelligence software developer to pursue what had been rapid growth for the subsidiary. The IPO raised $65 million for Wynyard, though the company only kept $26 million to fund its growth ambitions, with the remainder paying out Jade for the intellectual property and covering outstanding debt.

The split also included a services agreement where Wynyard would pay Jade for the sale and support of licences, managed services, development, consulting services and administrative support. The other leg of the deal would see Jade buy development services from Wynyard.

Comments from our readers

No comments yet