Receiver appointed to troubled Cognotec

SOFTWARE FIRM Cognotec has gone into receivership after almost 20 years in business.

Kieran Wallace of KPMG in Dublin was appointed as receiver this week on foot of an application from Barclays, which is owed some $9 million (€6.5 million).

It is thought Cognotec, which provides software for the foreign exchange market, suffered substantially in the banking downturn and struggled to generate sufficient cash to service its debts.

The Barclays loan that led to receivership was advanced in 2006 and at that time amounted to $12.5 million.

Cognotec employs 65 people, 45 of them in Dublin. The firm also has offices in London, New York, Singapore and Tokyo. Mr Wallace will attempt to sell the group as a going concern.

Cognotec was established in 1991 by Dublin-born entrepreneur Brian Maccaba, who is now based in London. The firm flourished as the internet boom took hold, winning some $60 million in venture capital funding. Flotation plans were put on hold after the economic downturn in 2001.

The most recent accounts to be filed for the company, for the year to the end of November 2007, highlight the cancellation of a project which provided 60 per cent of Cognotec’s revenue. The directors said they continued to develop the project in question because it was of “such strategic importance” and, as a result, breached the firm’s banking covenants. The project had since, they said, attracted “multiple clients”, while discussions with bankers and new potential equity investors were ongoing at the end of December. At that stage, the directors said they believed that “adequate funding” would be available.

A report from the company’s auditors attached to the accounts expressed uncertainty about whether or not the numbers offered a true picture of Cognotec’s business.

The accounts showed revenues almost halved between 2006 and 2007, standing at $12.2 million at the end of November that year. Pretax losses were cut from $11 million to $4 million, while shareholders’ funds were in deficit by $12.2 million.

The firm targeted costs during the year, spending almost $800,000 on redundancies.

At its peak, Cognotec employed 150 people, with some staff with the company since its foundation. Its largest shareholder is Mr Maccaba, who attracted considerable attention in 2004 when he took a high-profile slander action in Britain against a senior rabbi.

Mr Maccaba alleged the rabbi had spread sexual slurs about him but the businessman, who had converted to Judaism, lost the case, incurring an estimated £2 million in costs.

Calls to Cognotec’s offices in Dublin and London went unanswered yesterday.