[Paymex] legal advice...

[Chris Spargo]

Dear Neil

On the Monday, 29 September 2008 you made the following legal enquiry on the
Legal Access Services web site at (http://www.freelegalaccess.com):

Recently a credit card processing company called Paymex has collapsed.
Paymex processes credit card transactions on behalf of suppliers - they
remove the need for suppliers to have a merchant account (an account which
can process credit cards) with a bank.

When suppliers signed up for Paymex, suppliers were told that any money
Paymex receives from customers purchases would be held in trust accounts
until such time that a supplier draws down the payment. Paymex collapsed on
17th September. We have been contacted by the liquidators and been told that
we are effectively unsecured creditors and there is little or no chance that
we will get out money back. The liquidator has gone on to say that money
received from customer credit card transactions were not held in a trust
account but rather a standard business bank account. The money effectively
has been treated as a company asset.

Paymex was used by approximately 140 companies to process funds. Each
company has varying amounts that are in the hands of Paymex. In total,
according to the liquidators report there is approx 56,000 NZD which should
have been held in trust.

Had we known the truth with regards to how money was to be held, my company
for one would not have signed up with Paymex. As we have been deceived into
believing our money was safe i.e. that any money received on our behalf
would be held in trust accounts, are we entitled to any recourse? Are the
directors of the company liable? Company fraud?

Your intial thoughts and comments would be much appreciated.

Mr Warwick Ayres of Ayres Legal responds to your enquiry as follows :

Hello Neil

It may well be that from the liquidator's perspective you are perceived as
unsecured creditors. This would be exactly the same if the money had gone
into say BNZ. Deposit holders are unsecured creditors.

However, if you can show from information supplied to you by Paymex to
confirm that the money was held in trust then you would have a strong case
for arguing the money is not available to creditors and should be paid out
as was represented. I suggest you check your records and see what you can
find in this regard. If a trust can be proved then you have options
available to you.

If you do find the information as above you may need legal assistance to
progress matters further. If so please feel free to contact us.

Thank you

Warwick Ayres
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