Suppliers Claim They Are “Not Worried” By Dick Smith Administrator Cash Grab
Dick Smith suppliers, who were paid after the 23rd of December are set to be targeted by administrator McGrathNicol, excluded will be suppliers who dealt directly with the administrator after the Company collapsed.
McGrathNicol claim that after December 23rd which was when Dick Smith wrote out a cheque to Macquarie Bank the Company was “insolvent” and that they now have a right to try and claw back payments from suppliers.
The issue is set to get aired at the creditors’ meeting on the 23rd of July when McGrathNicol’s role shifts from administrator to liquidator.
According to sources Dick Smith were so desperate for branded stock for the peak Xmas New Year period, that they approached several vendors to get supply. In turn several of those vendors have told ChannelNews that they agreed to supply Dick Smith on the condition that they were paid immediately for several outstanding invoices for stock.
ChannelNews knows of two distributors who were paid but then chose not to supply anymore stock to Dick Smith.
The CEO of one major supplier said “By the 23rd of December suppliers were awake to the fact that Dick Smith was in trouble. Bills had not been paid and staff were walking. We got approached to supply stock. We said Yes on the condition that we got paid for stock already supplied to Dick Smith”.
“After being paid we chose not to supply the stock as the situation at Dick Smith had worsened and there was a real risk that we and several other suppliers were not going to get paid for the new stock”.
Another senior executive of a distribution Company said “Suppliers do not feel threatened. There is little chance that the administrator will get their hands on this money. This industry networks and several of us have spoken about the issue, we are not worried”.
At this stage not clear how many supplier payments were made shortly before or after 23rd of December 2015.
According to suppliers the liquidator will have to settle on an exact date when Dick Smith ceased to be solvent to determine the scope of the potential legal actions.
“If the date becomes earlier, more payments will be captured,” one source close to the administrator said.
McGrathNicol’s report outlined a $260 million asset shortfall that dashed any hopes of a return on the $200 million owed to Dick Smith’s unsecured creditors and revealed the receivership had only delivered about $80 million to the retailer’s banks, National Australia Bank and HSBC.
The liquidator is also expected to apply to the Australian Securities and Investments Commission for public examinations powers to question a number of other key individuals over the rapid decline and ultimate collapse of Dick Smith.