Last week, Disc Technology Center (DTC), the German subsidiary of Danish replicator Dicentia set up to acquire the bankrupt ODS Dassow plant, officially filed for insolvency. Two months ago, MPEG LA had successfully sued Dicentia for patent infringement, a German court requiring the company to cease DVD production and pay damages to the patent owners.

At the time, Dicentia’s CEO, Torben Nordquist, was reported to have accused the two managers in charge of DTC, Al Fetouhi and Kevin Martin, to have filed for insolvency of the subsidiary without consulting the parent company in Denmark (see story). Though halting the procedures, Nordquist had acknowledged in the German press that the launch "was much harder than expected." As it turned out, DTC eventually collapsed last week.

“Dicentia’s claim that they were not informed of the dire financial situation of DTC is simply a lie,” Martin and Fetouhi told DVD Intelligence, wishing to put the record straight. “We were telling Mr Nordquist and Mr Schertiger [the new CEO] for many weeks that unless suitable funding was arranged and the Dicentia problem with MPEG LA was resolved that DTC would have to file for insolvency. This is recorded in minutes of a meeting that was held between us on 8 August 2008. When we initially filed the application for insolvency it was to protect the staff and suppliers. Morally, legally and economically, it was the right action at the right time.”

DVD Intelligence understands that Dicentia, in fact, set up two companies prior to purchasing the Dassow plant: DTC, the operating company carrying all the liabilities, and Dicentia Dassow GmbH, the company holding all the assets, but no liabilities.

“The Dicentia strategy was always to acquire then sell the asset base of Dassow to generate cash to support their own ailing company,” Martin contends. “They started to try selling the assets only four weeks after concluding the deal to buy the Dassow plant. Dicentia Dassow is kept alive to fulfil this strategic aim. Proof of this is found in the fact that Dicentia Dassow GmbH paid in advance to secure the building rental. All the more surprising given that they claim to have no cash to pay the salaries of the employees in Dassow,” Martin adds.

Martin and Fetouhi are bitter at the turn of events. They wanted to make Dassow the manufacturing base for the slimmer, environmentally-friendly EcoDisc of which Fetouhi is the inventor. “We wanted to turn the site into the launching pad, the test arena, the operating theatre of the innovative EcoDisc.”

Martin claims Dicentia essentially mislead the German authorities as well as its own investors by producing a business plan that showed a massive manufacturing budget and a return to profit. There was little prospect for this to materialise as long as the company is prevented from producing the EcoDisc under the MPEG LA-initiated court injunction.

At the receiving end of MPEG LA’s personal injunction against him, Nordquist resigned as Dicentia CEO, replaced by Jesper Schertiger, an ex-ODS executive. However, DVD Intelligence understands that Nordquist is still the eminence grise behind the throne.

Story filed 18.11.08