National retailer Clive Peeters, who last week was placed into administration with debts in excess of $140 million, is facing a death sentence, with most of their major suppliers refusing to supply credit or stock to the company that is still trying to trade.
Allegations have also been made that the receiver manager is deliberately making it hard for consumers that are owed money or goods to make a full claim, with one senior credit manager claiming that the more rejected claims there are, the more stock there will be available for sale by the receiver manager.
According to several sources, although Clive Peeters is still trading, it is slowly being starved of new stock as vendors and receiver managers squabble over legal clauses.
The problem has arisen after solicitors acting for the receiver manager failed to supply vendors with a decision as to who would own new stock under a Retention of Title (ROT) claim.
According to a leaked memo supplied to ChannelNews, credit managers from several major appliance and consumer electronics companies backed by senior sales and marketing management are standing by a decision to not supply Clive Peeters until there is clarification.
The credit managers who control billions of dollars worth of stock flow in Australia recently held a phone hook up to discuss the problems at Clive Peeters.
The email, sent to ChannelNews by the credit control manager of a major consumer electronics who has supplied Clive Peeters in the past, said that most suppliers in Australia supply products with an ROT clause in their Terms & Conditions of Sale contract, and that because of a failure by solicitors acting for corporate advisory firm PPB to supply assurances, no stock will be supplied going forward.
Receivers Phil Carter and Daniel Bryant of corporate advisory firm PPB said last week they would conduct a formal sale of Clive Peeters’ assets, and had already received a significant number of inquiries from potential buyers.
The email went on to say, “What this means is that title or ownership of any stock supplied to a customer provided it can be identified (in our case by individual serial numbers) remains with the supplier until the invoice and in some cases all of the customer’s debt is paid in full. Under a “whole of monies” ROT clause the customer is even obliged to bank the proceeds from the sale of product / stock into a separate account and account to the supplier for that money”.
They go on to say that it is in the interests of the receiver manager to ensure continuity of supply to Clive Peeters so that he has as much stock available to sell, allowing the profits from the sale to pay down the debt of the National Australia Bank who are believed to be owed over $50 million.
A senior credit manager spoken to by ChannelNews claimed that solicitors acting for the receiver manager will try to reject or disallow as many ROT claims as possible, even valid claims. They say that the more rejected claims the more stock available for sale by the receiver manager.
According to documents seen by ChannelNews, solicitors acting for the receiver manager have advised vendors that it will be at least 2 – 3 weeks before a decision can be made on ROT claims.
One vendor told ChannelNews that he had referred the issue of the ROT to a barrister and former NSW A-list liquidator who said their claim was valid and he would not challenge it.
“If he can do it in less than one hour why would it take 2-3 weeks for the receiver managers to review the issue and make a decision?
“Most suppliers are fed up with this and are refusing to supply the receiver manager until a decision is made one way or another on the validity of their claims”.
The credit manager of a major appliance company said, “if an ROT claim is rejected the supplier will consider taking legal action against the receiver manager for the illegal sale of their stock. In some cases some suppliers may combine to take joint action and share the costs against the receiver manager to protect their stock and recover their debt”.
According to one source inside a major Japanese company, questions are now being asked as to why a highly regarded and reputable administrator was not appointed to protect the interests of all they claim. The appointment of the receiver manager, who is acting for the NAB, means that the administrator steps back until such time as the receiver manager has sold off enough assets to recoup the bank’s debt, before then handing back what is left to the administrator.
They said, “this would be done by the administrator anyway but now we will have two lots of fees and charges by the administrator and receiver manager, not to mention legal costs regarding ROT issues”.
At this stage Phil Carter and Daniel Bryant of corporate advisory firm PPB have not returned our calls to the company.
