Realtek has filed a motion in the Federal Court to recover a $2.5 million loan from a Perth hearing tech company once celebrated by Time Magazine, but now in administration.
Semiconductor giant Realtek has filed a motion in the Federal Court to recover a $2.5 million loan from a Perth hearing tech company once celebrated by Time (Magazine), but now in administration.
Taiwan-based Realtek filed a motion to the Federal Court of Australia on September 12, seeking to extend time to register security in Nuheara Limited (NUH).
That motion came subsequent to NUH entering administration on August 7 2024, after failing to reach an agreement with Realtek on a $2.5 million loan, signed on September 7 2022, which was due to mature on September 7 2024.
The loan agreement stipulated Realtek had security over all NUH assets, with the grant of security approved by NUH shareholders at an annual general meeting on November 29 2022.
However, Realtek did not register its security on the Personal Property Securities Register until March 15 2024, less than six months prior to NUH appointing creditors.
In a letter to creditors on September 24 2024, administrators Martin Jones, Matthew Woods and Clint Joseph from KPMG said by not registering its security more than six months before appointment of administrators, security interest held by Realtek was vested in the administrators.
Upon informing Realtek of this, the Taiwan-based company said it intended to make an application to the Federal Court for an extension on time to register its security on the basis it was not aware of the Australian requirements.
A hearing was set for September 20, but upon agreement from both parties was postponed to October 22 to allow other NUH creditors to make submissions.
If successful in its application, Realtek will become a secured creditor and will be entitled to realisation of NUH assets that otherwise would be used to pay unsecured creditors as a dividend.
In the letter to creditors on September 24, administrators said they had determined to not oppose the Realtek application.
“It was the mutual intention of Realtek and NUH that Realtek’s security interest was intended to be secured by way of registration on the Personal Properties Securities Register,” the letter said.
“Realtek’s explanation for the delay in registering its security, which is that it was inadvertent due to a lack of understanding of Australian requirements, appears credible.”
It’s also understood no other party has made a claim as a secured creditor.
Nuheara and Realtek first signed a memorandum of understanding to pursue a partnership in 2022, although no commercial or royalty agreement was ever signed.
Nuheara was based around what it described as revolutionary wireless earbud technology, which amplified human conversation above background noise: a technology now commonplace in most modern headphones.
Time, in 2020, named Nuheara’s third-generation device as one of the best innovations of the year.
But beneath the hype, the company struggled financially.
ASX data showed in the lead up to the administration the company had been in the red for some time, recording losses of more than $10 million and revenue below $4 million in three of the past four financial years.
The 2020-21 financial year was among the company’s best with revenue of $10.74 million recorded.
However, losses for that period sat at $7.89 million.
In April, the company launched a strategic review and noted early stage discussions with potential merger partners.
In its announcement, Nuheara said the business was restructuring its investment levels, including limiting new production and marketing spend.
At that time, the company reported a $1.85 million equity raising to complete the review.
The product was launched to the Israeli market in June this year and completed a US Walmart display alongside HP in March.
Sales in the third quarter of 2023-24 were described as relatively low, at $279,000.
The earbuds retail for $499 online.
In a 2023 presentation, Nuheara spruiked its growing US footprint, where its product was on display in more than 4,000 Walmarts, 600 Best Buys, and 100 Targets.
Nuheara was co-founded by Justin Miller, a Perth entrepreneur, with David Cannington, Sven Nordholm and Kevin Flynn.