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Breathe Networks out, Breathe Internet in

CEO leads management buyout of stricken ISP

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The assets of Breathe Networks Ltd (BNL) have been sold to the company's CEO, Steve Kaye, in a management buyout just one week after the ISP went into administration.

Kaye confirmed that a new company - Breathe Internet Ltd - had been incorporated on 13 May 2009, at the same Surrey-based offices as BNL.

Kaye dismissed claims made by BNL's ex-supplier Spider Networks Ltd that any contracts had been breached.

"Breathe Internet has purchased the assets legally. Assets, trademarks and domain names of BNL, and we haven’t breached anything," Kaye told The Register.

We also asked Kaye if he could shine a light on the mystery surrounding a filing with Companies House that showed BNL had applied to be struck-off the Register on 21 July.

“I don’t think that’s anything to be alarmed over apart from a filing that hasn’t been put in on the right deadline," he said.

“I spoke to the administrator this morning and he’s asked me the same thing. I said we’ve not been served with any paperwork, no one’s in breach of anything.

"Literally, BNL couldn’t sustain the business. There were larger debts obviously than it could service. The shareholders and directors took the decision to call in the administrator and I purchased the assets from the administrator.”

El Reg also asked administrator Neil Chesterton at The MacDonald Partnership, who is in charge of the BNL case, to comment on the strike-off document.

"I can only imagine it was because something hadn't been filed and it was proceeding towards an automatic strike-off, which happens if you fail to submit, for example, annual returns or accounts," he suggested.

Companies House documents show that BNL's accounts were overdue.

Chesterton also confirmed to us that Kaye - who joined the ISP as CEO in June 2008, when it acquired his firm Fast4 - had been sold BNL's assets in a pre-packed administration/buyout.

He added that administrator proposals were being pulled together over the next few days, but said: "It's very unlikely there'll be any return to any unsecured creditors".

Chesterton told us that "significant secured creditor" Unicorn Worldwide Holdings Ltd was owed "several hundred thousand [pounds]".

The outstanding sum owed to Unicorn means unsecured creditors can forget any chance of a payout, he said.

Meanwhile, Kaye claimed that customer data would be migrated over to Breathe Internet Ltd's system in the next few days.

"The problems with email have been blown out of all proportion," he said.

"Customers will see transition from one system to another but that was consolidation of the networks. We had networks all over the place purely and simply because of the acquisitions we made prior to 2008.

"Moving all those customers into one place to deal with cleanly has been a problem, a technical challenge," he admitted. "Shifting MAC codes, informing customers, picking up email, moving those. It's just a bit of a headache from a tech point of view".

"Customers need to know things are OK. Their services are still there, we’re still there, although we’ve gone through administration, it’s all for the best really. And none of their services are altered, affected or lost," claimed Kaye. ®

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